In a landmark move, Trillium Capital, a high frequency trading firm in New York, has been fined by FINRA for quote stuffing and market manipulation.

The fine may be small, $1 million, but the implications of the decision to charge the firm are huge. Trillium is the first high frequency trading firm ever to be charged with using an illicit high frequency trading strategy.

HFT firms have been suspected of manipulative practices for years, but no one has ever been able to prove anything.
That changed today when FINRA charged Trillium. Here's what they did.

From FINRA:

On the quote stuffing charge:

Trillium, through nine proprietary traders, entered numerous layered, non-bona fide market moving orders to generate selling or buying interest in specific stocks. By entering the non-bona fide orders, often in substantial size relative to a stock's overall legitimate pending order volume, Trillium traders created a false appearance of buy- or sell-side pressure.

This trading strategy induced other market participants to enter orders to execute against limit orders previously entered by the Trillium traders. Once their orders were filled, the Trillium traders would then immediately cancel orders that had only been designed to create the false appearance of market activity. As a result of this improper high frequency trading strategy, Trillium's traders obtained advantageous prices that otherwise would not have been available to them on 46,000 occasions.

This is big. FINRA found evidence of market manipulation and is faulting Trillium and these people:

David Fuller's view I will be interested to see articles on this development from the main financial media such as the Financial Times and the Wall Street Journal. (Search this site for 'frequency', to see more on this controversial subject.)