> Well, this is sort of what I'm saying. As a regular person, you just don't have the same information, or the ability to act on it as quickly.

Well the general idea is that everyone have the possibility of getting the information at the same time. The difference is how fast you can react, which seems fair to me.

To be frank, hedge funds, especially quantitative ones, are usually not the fastest to respond to earnings. The lifecycle of earnings announcements often roughly goes like that:

- Company X releases its earnings on the SEC website. This usually happens once the market is closed (~6pm) so that people have until the next morning to digest it, and avoid dubious ultra fast reactions. The publication date was already announced so everyone know it's coming.

- The next morning at market open, some (few) investors already place trades based on the earnings published. Most of the time, these are human decisions made by financial analysts experts on company X that read the earnings, because systematic funds seldomly trade on unstructured data such as PDF reports.

- an earnings calls takes place the next morning also, so that financial analysts can ask questions and clarifications about the figures to company X. Right after, the wav/mp3 of the call is uploaded (often on the company website). Some more investor do trade based on the earnings call, either by financial analysts listening to it, but more and more just by reading the transcripts. Some (few) hedge funds apply NLP to parse the transcripts at that point, and trade based on the results.

- The next day, major data providers (think Reuters/Refinitiv, Bloomberg, etc) have processed the transcripts to structured data. The major hedge funds all subscribe to these data providers, and are now able to start trading on the earnings event.

- The same day, Bloomberg releases an article about the earnings of company X and explains why its good, dedicated retail investors and non systematic hedge funds get interested and join the trade.

- for the next 10 days or so, more and more (slower) people will continue the trend on these earnings, until the price stabilizes to a market consensus. See PEAD - post earnings announcement drift - for more information.

This is more or less how it goes for earnings. Nothing strikes me as _unfair_ here. Everyone had the opportunity to put effort in reading the earnings. It's just a trade-off of convenience (i.e. I want structured data), price (i.e. I hire a financial analyst to interpret the earnings early), and R&D (i.e. I invested in NLP to parse transcripts) versus the speed of reaction to the event.

What could make it more fair for retail investors? Forbidding the use of financial analysts because they are more knowledgable than average Joe? Forbidding the use of NLP because average Joe does not know how to code?

> I just have a hard time believing that hedge funds only act on public information.

Oh but trust me they do. Now there will always be outliers, shaddy deals, etc. Any system with rules have cheaters. But that's definitely very very exceptional. This is especially true for non proprietary funds (funds managing money of other people - the vast majority), since the amount of scrutiny is huge.

Allow me to use myself as an example. I work in a hedge fund, though I deal mainly with operational / technical / quantitative matters. I have one of the lowest grade of surveillance level (MIC) which still entails:

- All my work phones are tapped (mobile and fix)

- All my work conversations are logged.

- I am forbidden from contacting anyone about professional or financial matters if the medium is not logged (i.e. No whatsapp, no signal,...)

- I am forbidden to invest in most asset classes. Except for equities, for which I need pre-approval of the trades 2 days in advance, and have a minimum holding period of 30 days. Compliance has access to my brokerage account, and reports on those of my close relatives.

- I am forbidden from giving any financial advice to anyone, even family or friends

- I am forbidden from receiving any financial research or counseling material from anyone, through any medium (mail, phone, conference) if the material is 1) free or 2) undeclared.

- I am forbidden from discussing or meeting with some people in the office, as well as walk in certain parts of it ("Chinese walls") , since screens could reveal information, or conversations could take place.

- At leat 15h of compliance / legal training per year.

- I am personally (not the company: myself) liable up to $10 millions (disclaimer: I don't have that kind of money) if any material incident happens that could be traced by me not setting up the proper mitigation. E. G. If a bug happens and I did not give the team the means to have catched it. Or the worst nightmare of MICs: if someone does some shaddy business, and I did not arrange for enough control or compliance training for him to know that it's illegal.

- The usual set of no paid gifts, trips, conference in fancy hotels or whatsnot.

- etc etc etc

Keep in mind that's not even the highest scrutiny level. So, yes, some people cheat, we see it in newspapers, but that's the 0.0001%

> Where do I learn more about dark pools?

I honestly don't know. This is really a detail of equity markets, each broker have a different one with different specificities. As for front running, this is IMHO something of the past (at least on equities, for major brokers). Clients are well aware of the risk and require huge amounts of compliance and processes on their brokers to prevent that, not even mentioning the regulators themselves. The reputation risk is just not worth it.

> My initial response to learning about them was that they are basically tailored to hide trades from the general public

Well that's true. But it's often because the purchase is too huge to be made public, it would disrupt the market for no reason. Think of what happens to crypto when a whale sells off, huge upswing followed by huge downswing, until the price settles back again,and in the meantime the investor got an awful slippage, people panicked, bit trade crazy stuff, etc.

I know dark pools trigger the imagination of journalists and retail, but there's really nothing fancy about them. Let's take a real world example to explain how they are used.

Every year, Apple reserves a portion of their profits to buy back some shares from the market, which they then destroy (I won't enter into the details of why they do that, it's a pretty common practice for growth companies). Apple does this every quarter, it amounts in 2021 to $20 billions of share buyback per quarter (~$80 billions last year). What would happen if Apple just goes on the market and places a fat $20 billion market order? It would be total chaos. With such a big order, the whole liquidity of the book would disappear, price would skyrocket, people shorting apple would receive insane margin calls, people long apple would be instant billionaires for a split second, volatility would cramp up and market dislocation would trigger, meaning the stock would have to be halted, trading bots would sell everything, Apple itself would be ruined to buy at such a large price, etc, etc, etc.

That's where the dark pool can be handy. Apple announces publicly the buyback amount and date (this is mandatory for public companies), and in exchange for a (often) slightly less good price, apple can perform its buyback on a dark pool where the price won't move, and nobody will panic.