OVERNIGHT FINANCE: ‘Flash boys’ to hit back

TOMORROW STARTS TONIGHT: DERIVATIVES MARKET TO FIRE BACK AT MICHAEL LEWIS: The Commodity Futures Trading Commission will host top derivatives market investors tomorrow in Washington for a panel on high-frequency trading. Per CFTC’s agenda: “The witnesses will respond to the charges in Michael Lewis’s book Flash Boys.’”

OVERNIGHT FINANCE caught up with two of tomorrow’s panelists:

{mosads}–Joe Saluzzi, co-founder of Themis Trading: “We’re at a point where everyone wants to know what the heck is going on under the hood of the car. But the regulators have to take some blame here. They should’ve asked these questions years ago – they’re at fault, too.”

–Bryan Durkin, CME Group Chief Operating Officer: “Unfortunately, much of the coverage has been based on misinformation.  Many of the recent complaints do not apply to the U.S. futures markets… The futures markets today are more open, accessible and the playing field is as level as it has ever been.”

Full CFTC agenda: http://1.usa.gov/1gBxLmA.

THIS IS OVERNIGHT FINANCE, where our Philly-hometown loyalty can’t wait for your Nats to lose tomorrow night. Tweet: @kevcirilli. Email: kcirilli@digital-release.thehill.com.

Back to work…

WIRETAPS MIGHT BE OUT IN MICKELSON PROBE: Regulators might not be able to use wiretaps in their investigation of whether professional golfer Phil Mickelson, billionaire investor Carl Icahn and sports bettor William Walters were involved in insider trading.

The Wall Street Journal reported that officials at the Federal Bureau of Investigation and the Securities and Exchange Commission are investigating whether Icahn offered illegal trading advice to Walters and Mickelson in 2007. All three deny wrongdoing.

—WHAT’S NEXT: NEWS EXPOSES REGULATORY CHALLENGE. The reports expose a significant hurdle for regulators and a potential strategy for Wall Street: leak a federal investigation and lose the possibility for wiretapping, which has helped feds convict dozens of insider trading cases.

“The publicity is going to make this a lot more difficult, if there ever was a case,” said Harvey Pitt, a former chairman of the Securities and Exchange Commission, in an interview with Reuters. http://bloom.bg/RZu5zt

—WALL STREET REACTION: Bad day for Icahn Enterprises (IEP). Stocks closed down 4.11 points.

HIRED: SULLIVAN AT FED. The Hill’s Pete Schroeder reports: “The Federal Reserve is bringing on an insurance expert to help it navigate its new oversight of large insurance companies.

“The central bank has hired Thomas Sullivan, who served as Connecticut’s insurance commissioner during the financial crisis, to a senior adviser role…

“In his new job, Sullivan will be playing a lead role in overseeing the establishment of capital standards for insurance companies, and will also serve as the Fed’s voice with other regulators across the globe on the industry.

“The Fed, primarily known as a bank regulator, was given power to oversee the biggest players in the insurance industry and other large nonbank firms critical to the financial system.” http://bit.ly/1mKMKbU.

NUMBERS – MAY MANUFACTURING, CONSTRUCTION INCREASE. May’s ISM manufacturing index: 55.4, as expected, and up from April’s 54.9. (ISM screwed up May’s index earlier this morning with a lower number but corrected the error.)… May’s construction increased 0.2 percent. No surprises…

QUOTABLE: “We have a department at this great university teaching people how to get around every rule you can conceive of to make big bonuses at big banks.” –Former Fed Chairman Paul Volcker criticizing his alma mater Princeton University while speaking Friday at Princeton University, Jacob Donnelly writes for The Daily Princetonian.

We take it he’s not on the alumni board?

ON-TAP FOR TOMORROW: The Senate Banking Committee will mark-up its Terrorism Risk Insurance Bill tomorrow at 10 a.m…. Kansas City Federal Reserve Bank President Esther George speaks at 1:50 p.m.

NOM WATCH: The Senate is expected to vote sometime this week on Sharon Bowen to be commissioner of the Commodity Futures Trading Commission… Obama sent Shaun Donovan’s nomination to head the Office of Management and Budget, as well as Julian Castro’s nomination for chief of the Department of Housing and Urban Development to the Senate.

HERITAGE HITS EX-IM: Diane Katz, the Heritage Foundation’s regulatory policy research fellow, writes: “Ex–Im beneficiaries argue that export financing preserves American jobs, but the vast majority of bank subsidies benefit very large corporations that could self-finance or obtain private investment—as is the case for 98 percent of all U.S. exports. Rather than perpetuate these subsidies, Congress should help all American businesses by reducing corporate tax rates and regulatory burdens.” http://herit.ag/1krijcr. 

–Heritage soft-launched its new conservative news outlet today, The Daily Signal (www.dailysignal.com).

HOW MUCH DID THE BRADY’s PAY FOR ALICE? Quentin Fottrell for MarketWatch: “Assuming Mike and Carol Brady paid Alice the minimum wage ($1.30 in 1969), it was still an unrealistic luxury for an architect with six children (not including cousin Oliver) to employ a full-time housekeeper. But it was a sitcom, after all…

“The wave of tributes after the death on Saturday of Ann B. Davis, 88, who played the wise-cracking maid on ‘The Brady Bunch’ (1969-1974), is a testament to… the beloved actress [and the sitcom…] It may also reflect nostalgia for an era when the prospect of affording a live-in housekeeper… may not have been so, well, far out… In 2014, the annual salary of a live-in housekeeper ranged from $45K to $75K.” http://on.mktw.net/1oP9cW9.

MORE FROM THE HILL:

–Merchants ready Supreme Court ‘swipe fee’ challenge: http://bit.ly/1ht04V8.

–Lew: Treasury fighting on new battlefield: http://bit.ly/1n5Z3S2

–White House needs $1.4B more to cope with child migrant influx: http://bit.ly/1kCfuAW

–Businesses wary of global tax talks: http://bit.ly/SoZU5f

–Greeting card industry opposes House transportation plan: http://bit.ly/1mKR3Ej

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This story was updated June 3 at 9:45 a.m.