Are 'Investors' Worthier Than 'Traders'?

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Should the top U.S. securities regulator be looking to protect one category of market participants against another legitimate class of participants?

SEC Chair Mary Schapiro told Congress last week that when examining new market structures, the commission intends to favor the interests of "long-term investors" over those of traders.

Schapiro also indicated the SEC is uncomfortable with advances in trading technology that could hand an edge to "sophisticated traders."

The agency is looking into phenomena such as dark pools, co-location and flashes. It's considering issuing a ban on so-called flashes, which give firms that belong to exchanges an advance peek at buy and sell orders before they're made public.

Is this an appropriate posture for the SEC to take toward the evolution of market structure and technology?

Or is Schapiro exploiting the uneducated public's stereotypes of securities traders - perhaps playing to the same peanut gallery that Warren Buffett famously targeted when he indiscriminately branded all derivatives as "weapons of mass destruction"?

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