Subject: File No. 4-652
From: David A. White, Mr.
Affiliation: Individual Trader in Equities

September 27, 2012

If possible I would like the following topic to be discussed and questions asked. I watch and read most everything I can to understand HFT's and the advantages they have over ordinary traders such as myself. The main topic of discussion seems to be the speed advantage and the fact they see bid/ask in milli seconds before the rest of us. Arbitrage is only one way the HFT's make money. They also contract with clients to write algo's and execute trades on their behalf. This is the area that is virtually never discussed, in public. Question: Who are their clients? Hedge funds? They can write an algo to take a company share price to a specific price on behalf of their clients. This execution of the algo could represent a "Bear" raid on a stock for instance and do irreparable harm to a companies value and to those holding the stock. This can be used to start a downward spiral in a stock price that can act like an avalance and I have seen it happen hundreds of times. Sometimes it is done on behalf of the client to help the client or clients (groups of Hedge funds working together) to cover a bad position and reduce or eliminate losses. I believe, but cannot prove that this is how the "Flash Crash" occurred. It was an attempt to take one companies share price down (hint it was a biotech) so they could cover their short positions and it snowballed and triggered sell programs. Besides Hedge Funds I beleive HFT's are also used by Market Makers to peg a share price on Options expiration. I have watched hundreds of times as the price of a share of stock is taken down by several points in less than a few minutes with volumes exceeding several million shares, so that a maximum pain number is reached on expiration. So if you could why not ask one of the largest and well know HFT's as an example how many Hedge fund clinets they have and then ask how many Market Makers they also work with. When you get those specific answers you will begin to find out exactly what caused the Flash crash and also why the average investor no longer trusts Wall Street, The markets and feels as if the SEC has let them down when it comes to overseeing the markets. The average investor knows that the game is rigged and those that operate within this structure of HFT's working for Hedge Funds and Market Makers to control share price are doing more than scalping here and there. They are destroying the basic foundation of the markets. Oh, and to followup on the Flash Crash, from aht I could tell only one company never fully recovered anywhere near their pre-flash crash price and the was Dendreon.