In This Review

Flash Boys
Flash Boys
By Michael Lewis
W. W. Norton & Company, 2014, 288 pp

Hardly a week goes by without news of some malfeasance committed by a large American or European bank. Lewis zeros in on one particularly explosive charge: the claim that major banks engage in predatory trading behavior. Instead of filing their customers’ orders to buy and sell stocks and bonds in a straightforward way, banks have found it far more lucrative to trade those orders in “dark pools” -- private stock markets run by the banks themselves -- and to sell access to those pools to high-frequency traders who use superior technological tools to make large purchases or sales, often at the expense of ordinary customers. This has allowed the banks to game the financial system and enhance their earnings -- as well as the bonuses they pay to key employees and executives. Lewis’ main characters are a group of financial specialists who become disillusioned with this rigged system and set up a new exchange called IEX, which aims to level the playing field and treat investors more fairly. The book is a chatty exposé, rich with dialogue and character studies, and also explains complex financial processes in terms accessible to laypeople.