These Comments Won't Get Mark Cuban Invited to Any Wall Street Parties

By Tim Parker,

Shutterstock photo

Mark Cuban was-well-Mark Cuban on Thursday. The billionaire entrepreneur, investor and owner of the Dallas Mavericks, isn't one to edit his words and he certainly didn't do it Thursday during a CNBC interview.

First, some background. Worth a reported $2.4 billion, Cuban didn't make his riches by investing in the stock market. In fact, he's about as big of a fan of the stock market as the NBA is of him. If the critics of high frequency trading wanted a celebrity spokesperson, Cuban would be the perfect choice. In a Wall Street Journal interview, Cuban said this about high frequency traders:

"They are the ultimate hackers. They're running software programs that have one goal, and that's to exploit the trading systems as early and often as possible."

What did he say on Thursday?

Cuban, in a CNBC Fast Money Halftime report interview, was first asked about the fake AP tweet and said, "A hundred and forty characters and - what was it? - $200 billion worth of market cap just disappeared for a few minutes and then it came back. I mean, it was crazy." He went on to say that Wall Street shouldn't be surprised that such events take place when the market is dominated by algorithmic trading-some of which scans for keywords in news headlines and makes trades based on those words.

Then, he repeated what he wrote about in a 2010 blog post : Wall Street doesn't know what business it's in. His argument is that the stock market was originally created to provide capital for businesses in exchange for an equity stake that allow the investor to share in the profits over time through stock appreciation or dividend payout. Instead, it's a complicated "chess match" where most don't understand the game.

"We've gone from a market designed to raise capital to support new businesses to a platform designed for algorithmic traders and hackers," Cuban said Thursday. He points to the lower amount of IPOs and secondary offerings as proof that stock markets are no longer attractive to company and don't work in the investor's best interest.

READ: What is High Frequency Trading?

What is his solution?

First, he wants to eliminate taxes on capital gains and dividends on shares of stock held for at least five years. (Assuming that would apply to private as well as public shares, that would certainly lower his tax bill considerably.) Second, he floated the idea of a trading tax. Finally, he wants, "the genie put back in the bottle" for high frequency traders. He wants the practice eliminated. Speaking again about the fake AP tweet, he said:

"What's going to happen when there's a real event? Do you really think that there's going to be any bids at all?" he said. "All we have are circuit-breakers that we hope will work. And then after the circuit breakers, what happens?"

View Marketfy's high frequency trade webinar here.

(c) 2013 Benzinga does not provide investment advice. All rights reserved.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing International
Referenced Stocks: SPY

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