The founder of Nanex, LLC, stated on Tuesday that he will be receiving a $750, 000 whistleblower award. The move came after Nanex gave a tip that prompted a $5 million U.S. Securities and Exchange Commission's fine against the New York Stock Exchange in 2012.
According to Reuters, a critic of high-frequency traders, Eric Hunsader, stated that he was given an award after tipping off the SEC that NYSE gave some of its customers trading information prior to its launching. After his statement, SEC declined to comment, while a NYSE parent Intercontinental Exchange Inc. could not be immediately reached for any comment regarding the whistleblower award.
"The NYSE trading information was described as real time, even though some people received it before others," Hunsader revealed on Tuesday. "How can you call them real time feeds if one is faster than the other?" he added.
NYSE was acquired by ICE in 2013. It agreed to pay the SEC $5 million in 2012 for a civil case. The SEC accused NYSE that starting in 2008 some of its clients already got a head start at the trade order information that sorted from single-digit milliseconds to multiple second.
CNBC reported that, the agreement on both parties claimed that the software issues and compliance failures are the reasons for the early look of the trade order information. This marked the agency's first financial sentence against a U.S. exchange. NYSE, on the other hand, never admitted the charges, but it also did not deny the punishment. It said that at the time, the SEC had not accused international conduct or that investors were harmed by their action.
Hunsader also revealed that his firm, Nanex, found out about the issue in 2010. He also claimed that the tools used at the SEC would not recognize a similar issue if it happened again.
Value Walk noted that Hunsader admitted that he told the NYSE about the issue first, but he was not taken seriously. He also believed that an introduction from another regulator helped him for this case.
Meanwhile, Hunsader was pleased by the reaction of the SEC for granting him $750,000. The whistleblower also said that he is planning to spend his award money on the college tuition of his four daughters.
