Flash Boys


In Flash Boys: A Wall Street Revolt Michael Lewis deftly explains how modern Wall Street works, which is a notable challenge, because you get the impression from reading this book that many top people on Wall Street don’t completely understand how Wall Street works. Lewis uses plain language and easy-to-understand examples to illustrate complex systems that mainly exist in fiber-optic cables and servers.

The hero of the story is Brad Katsuyama, a Canadian Wall Street guy (an outsider, really) who breaks with the go-along-get-along culture on Wall Street and questions what his company and others like it are actually doing with investor money. It turns out Wall Street trades are being front-run by high-frequency traders who, thanks to their better technology, are able to see orders before they’re actually placed and buy low and sell high to investors. Katsuyama says the market is rigged, and it’s hard to argue with this assertion. His solution was to build an exchange—called IEX—that eliminates the advantages of high-frequency traders.

Here are Katsuyama and Lewis in a CNBC segment that reportedly brought Wall Street to a halt.

The highlights

The whole thing

And Michael Lewis on ’60 Minutes’

Why does this matter for any of us outside of Wall Street? Because our money that is being invested for our retirements is part of a corrupt system that is—according to Lewis and Katsuyama—being gamed by companies that aren’t interested in investing money but rather in exploiting legal and technological loopholes. We’re all party to this, and we’re all losers under this scheme.

Flash Boys is a revealing, educational and maddening story, and I hope it gets the attention it deserves. Capitalism is practiced every day by hardworking people across the country, but the public face of capitalism, and the choke point where Main Street investor capital lies, appears to be corrupt.


Joe Donatelli
Joe Donatelli is a writer in Los Angeles

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