Michael Lewis' new book claims stock markets are rigged 

Michael Lewis’s new book about high-speed traders skimming pennies off of Wall Street transactions has prompted criticism that Lewis is making irresponsible and simplified claims. But the author defended himself Tuesday, saying he's simply shedding light on a system he says is rigged and long-hidden from the public.

“This isn’t Michael Lewis, wandering in, making grand pronouncements. I’m following the story of people, actually Wall Street insiders, trying to figure out how this stock market works because they themselves don’t understand,” the best-selling writer told TODAY's Matt Lauer.

In his just-released book “Flash Boys: A Wall Street Revolt,” Lewis claims the high-frequency trading industry within the nation’s stock market is divided into two worlds of “haves and have nots” based on trading speeds they can afford. That system leads the privileged to get access to trades faster, before most others even have a chance to make a transaction. 

“The haves paid for nanoseconds; the have-nots had no idea that nanoseconds had value. The haves enjoyed a perfect view of the market; the have-nots never saw the market at all,” he writes in the book.

The system has created a “whole ecosystem on Wall Street around themselves” involving banks and exchanges that cater to people who have the inside track, Lewis said on TODAY.

“It’s an unfair playing field,” he said. “It’s crazy for investors to be trading against people who have, essentially, have knowledge of the prices before they do.”

Many in the industry have responded negatively to the charges, including CNBC's Bob Pisani, who knocked down numerous allegations Lewis lays out in his book.

Modern Markets Initiative, an advocacy group for high-frequency traders, released a statement welcoming a debate over “the next evolution of market structure” and how to make the system more efficient for investors. However it rejected the primary claim Lewis makes.

“The markets are not rigged. Saying otherwise is a broad generalization that lumps the vast amount of good market behavior in with a few bad actors,” the group said.

But Lewis dismissed the critics, insisting the story he tells doesn’t originate from him but from Wall Street insiders who realized something was amiss.

“The story is their investigation of this market and it involves people from exchanges, people who work at high-frequency trading firms, people who came out of the big banks who were actually appalled by what’s happening to the system,” he said.

But Lewis said his book shouldn't scare average investors into taking their money out of the market.

"I don’t think that’s the right answer, because you’re talking about scalping. It's pennies each trade," he said. "It shouldn’t go on. It's unnecessary Wall Street intermediation, but it’s crazy to miss out on investing in the stock market just to avoid being scalped."

Follow writer Eun Kyung Kim on Google+ or on Twitter.