Image
© Wallstreetonparade.comTerrence Duffy of the CME Group Testifying Before the Senate on May 13, 2014.
Someone is perjuring themselves to Federal officials and that individual(s) should enjoy a nice long sabbatical at the courtesy of the taxpayer, forgoing the staid Armani for the more robust orange jump suit.

Following SEC Chair Mary Jo White's less than credible testimony to the House Financial Services Committee on April 29 that "the markets are not rigged," Terrence Duffy, Executive Chairman and President of the CME Group which owns the Chicago Mercantile Exchange, the largest futures exchange in the world, delivered the same message to the Senate Agriculture Committee yesterday.

Duffy testified that "Our market data is sent to everyone at once. While customers have several options in terms of how they can receive data from us, we do not restrict access. Having multiple connectivity options makes our markets accessible to a broader array of participants."

That statement stands in stark contrast to a lawsuit filed on April 11 by three futures traders who present breathtaking allegations that the futures market overseen by Duffy has been entering into "clandestine contracts" with high frequency traders who, for a price, are allowed "to see price data and unexecuted order information before anyone else in the financial world."

Equally stunning, the lawsuit charges that the Chairman and CEO of the CME Group, "repeatedly gave false information to the public, to journalists and the media touting alleged advantages to the presence of HFT for price and liquidity while never mentioning that they were allowing the HFTs to get price information before everyone else and to trade on this price information."

The lawsuit covers the period from 2007 to 2014 so it is not immediately clear who the individual referred to as Chairman and CEO actually is.

Lawyers who file frivolous or wildly misleading allegations in Federal Court can be sanctioned and fined and suffer serious damage to their legal career. One must therefore assume that the traders have evidentiary support for the eye-popping and detailed charges they are making in their lawsuit, which seeks class-action status.

The case is Braman et al v CME Group Inc et al, and was filed in the U.S. District Court for the Northern District of Illinois. The Civil Docket for the case is #: 1:14-cv-02646 and has been assigned to Judge Charles P. Kocoras.

The CME Group is represented by the Wall Street powerhouse law firm Skadden, Arps, Slate, Meagher & Flom, LLP. Following are excerpts from the lawsuit. (See High Frequency Trading Lawsuit Against CME Group, et al for the full text.)

"At all relevant times, the CBOT and the CME together comprised the world's largest derivatives exchange and provided what it labeled as real-time price data information on United States debt instruments, agricultural products, energy, equity indexes, foreign exchange rates and metals to the entire financial world. The CBOT and CME charged exchange fees and data-fees for this real-time price data to market users and the world's financial marketplace falsely maintaining that the data sold was in real-time...

"Throughout the Class Period, the Defendants held themselves out to the world as providing real-time and bona fide market data when throughout this same period, the Defendants also charged high frequency traders ('HFTs') for the ability to see price data and unexecuted order information before anyone else in the financial world, including all the people who had paid and continue to pay the Defendants for seeing the same data first, in real-time.

Read the rest of the article here.