but he was the first to find brad katsuyama, who is the first to figure out how it was being done. >> unlikely character, a trader at the royal bank of canada, a young canadian man named brad katsuyama realized that the market that he thought he knew had changed. the market seemed to be willing to sell a stock. but the minute he went to buy it, someone else bought it, the stock went up. it was as if someone knew what he was doing before he did it. >> kroft: back in 2008, katsuyama was 30 years old and running the royal bank of canada's stock desk in new york with 25 traders working for him. every time one of them tried to buy a large block of stock for a client, their order would only be partially filled and the price of the stock would go up. it kept happening over and over again. >> brad katsuyama: the best analogy i think is that your family wants to go to a concert. you go onto stubhub, there's four tickets all next to each other for 20 bucks each. you put in an order to buy four tickets, 20 bucks each, and it says, "you've bought two tickets at 20 bucks each." and you go back and

he was the first to find brad katsuyama the first to figure out how it was being done. >> a very unlikely character. a trader at the royal bank of canada, a young man named brian katayama realized the market he thought he knew had changed. the market seemed willing to sell stock. the minute he went to buy it someone else buy it. the stock went up. it was as someone knew what he was doing before he did it. >> eric schneiderman is with us investigating the high-frequency trading. welcome. >> thank you. >> so high-frequency traders, as shown by michael lewis and steve kroft, is it illegal? >> it's been around for a while, not illegal. what michael is talking about are high-frequency traders who use their speed to take advantage of cracks in the foundations of our market. as i think he explained in the "60 minutes" piece, we now have 60 public and private markets that are linked up, and there are cracks. there are places you can get to faster than other people and front-run the market. what's improper is front-running the market, using any special advantage or edge with your speed to have an

. >> lewis's book highlights a trader named brad katsuyama.est of the markets billions of dollars a year. he figured out a way to defeat the problem and has launched a new exchange that he says will level the playing field. we've talked a lot about this this morning. we'll continue to talk about that. our guest host for the hour as we mentioned, one of "squawk box's" very own market masters, he's on set with us this morning, neel kashkari. he is a gubernatorial candidate for the state of california. he is also as joe mentioned former head of global equities at pimco. it's great to have you here. >> does he get to keep his market master status now that he's going into politics? how does that work? >> that's a good question. you say you've been focused more on what's been happening on the campaign trail. >> absolutely. i left pimco, spent an entire traveling the state, meeting with families of all walks of life to consider whether it makes sense to run. i made my decision to run and launched the campaign in january. >> just your general sense of