A WSJ article discusses what the SEC is looking at:
The SEC is examining whether such order types unfairly allow high-speed traders to jump ahead of other investors in an exchange’s “order book,” or the queue of buy and sell orders that are typically ranked by price and when they were received, according to people familiar with the matter.
Another area of focus for the SEC are the rebates some traders earn from exchanges even as other investors pay fees to complete trades, say people familiar with exchange operations and the SEC probes.
The SEC should ignore the quid pro quos among institutions, exchanges, and retail flow, because for decades exchanges and brokers screwed consumers via their coalition on the commissions and spreads, which was encouraged via the regulators. Why trust them now? As if the current most prominent regulator, Barney Frank, won’t be an effective crony capitalist in 9 months, setting an example for all the other current regulator big-wigs. The key for them to be valuable is creating barriers to entry, as there’s no big institution that’s going to hire someone good at lowering costs to consumers. Of course, that’s all hidden behind some pretext about protecting against fraud, and helping the stability of the exchanges, and fairness, and lots of other platitudes. Just think about whatever the SEC wrote in the 60′s and 70′s and know they were shills for the brokerages and exchanges who colluded to steal investors blind via spreads and commissions that never would have survived a competitive market (thank you regulators!).