Tags: Schneiderman | high-frequency trading | Metropolitan Council | finance

NY Attorney General Cracks Down on Philanthropy and Finance

By    |   Friday, 25 Apr 2014 08:10 AM

New York State Attorney General Eric Schneiderman is serious about investigating and penalizing those involved in financial irregularities. This is true whether they are involved with philanthropy or finance.

His office is responsible for the conviction of William Rapfogel, the CEO of the Metropolitan Council on Jewish Poverty, a New York human services agency that helps 100,000 New Yorkers fight poverty annually by providing food, affordable housing, home care, career counseling, legal and immigration services and crisis management assistance, regardless of age, gender, religion, race or ethnicity.

Schneiderman claims Rapfogel and others stole more $9 million during 20 years from the non-profit organization through an invoice-padding and kickback scheme that involved the charity's insurance broker. The inflated payments to the insurance firm were funneled back to Rapfogel and his accomplices. He will receive a prison term of at least 3 1/3 to 10 years along with the payment of $3 million in financial restitution to the Metropolitan Council.

The Council receives much of its funding from government sources, including state and city grants and contracts and earmarks from individual lawmakers, according to The New York Times.

Also on Schneiderman's agenda are the high-frequency trading firms that use dark pools. Dark pools are private exchanges that permit anonymous trading.

Recently, he issued subpoenas to three algorithmic trading firms to determine whether they have received unfair competitive advantages relative to the general public and other traders. The companies identified were Tower Capital Research, Chopper Trading and Jump Trading.

Stock exchanges are required to execute all trades at the National Best Bid and Offer (NBBO), which is the national price for a given stock. The exchanges accomplish this by aggregating the bids and offers across the entire market to find the most precise price, based on the instantaneous demand and supply.

Critics of algorithmic trading claim some exchanges permit high-frequency traders access to this aggregation process ahead of the market, enabling them to know the NBBO before the general public.

The New York State Attorney General has been exercising his duty to uphold the rights of the general public against unfair practices and criminal behavior, regardless of where they occur.

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New York State Attorney General Eric Schneiderman is serious about investigating and penalizing those involved in financial irregularities. This is true whether they are involved with philanthropy or finance.
Schneiderman, high-frequency trading, Metropolitan Council, finance
357
2014-10-25
Friday, 25 Apr 2014 08:10 AM
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