For years, we’ve been stating that HFT algorithmic software is merely a criminal tool that allows bankers to fleece naive clients. Vanguard Group Founder John Bogle exposed this criminality earlier this year in a Time magazine interview:
“The job of finance is to provide capital to companies. We do it to the tune of $250 billion a year in IPOs and secondary offerings…What else do we do? We encourage investors to trade about $32 trillion a year. So the way I calculate it, 99% of what we do in this industry is people trading with one another, with a gain only to the middleman. It’s a waste of resources. It’s a lot of money, $32 trillion. Nearly double the entire U.S. economy moving from one pocket to another, with a toll-taker in the middle. Most people refer to them as stock brokers”.
I left a Wall Street firm more than a decade ago in disgust to start my own company due to excessive fleecing of clients, and this was before the widespread use of HFT algorithms. Back then there were the “old timers” that would excessively churn clients accounts to pocket fees, and in one weekly meeting, we were informed of one financial consultant in our office that churned a $35,000 account to generate more than $30,000 in fees as ridiculous as this sounded for back then. But today, thanks to HFT algos controlling nearly all trading, there are nearly no accounts at large global investment firms, even those with a managed fee structure that is not sheared for the sole purpose of generating fees and skimming money from clients. Remember, Jon Bogle revealed that bankers churn USD $32 trillion, nearly TWICE the amount of the entire US economy, is churned in US stock markets EVERY YEAR, with a gain ONLY to the middleman – the financial consultant, private wealth manager and ultimately the Commercial Investment Firm.
Today, Zero Hedge posted another scathing indictment of commercial bankers’ use of HFT algorithms as a criminal tool to perpetually steal money from all clients.
HFTs Have Devolved To Two-Bit Criminals Straight Out Of “Office Space”
