Front Running

AAA

DEFINITION of 'Front Running'

The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients have been given the information.

INVESTOPEDIA EXPLAINS 'Front Running'

For example, analysts and brokers who buy up shares in a company just before the brokerage is about to recommended the stock as a strong buy are practicing front running.

Another example is a broker who buys himself 200 shares in a stock just before his or her brokerage plans to buy a large block of 400,000 shares.

RELATED TERMS
  1. Flash Trading

    A controversial computerized trading practice offered by some ...
  2. Churning

    Excessive trading by a broker in a client's account largely to ...
  3. Circular Trading

    A fraudulent trading scheme where sell orders are entered by ...
  4. Guilt-Edged Investment

    An unethical investment that generates profits for the investor. ...
  5. Tailgating

    When a broker or advisor buys or sells a security for a client(s) ...
  6. Pump And Dump

    A scheme that attempts to boost the price of a stock through ...
Related Articles
  1. Online Investment Scams Tutorial
    Economics

    Online Investment Scams Tutorial

  2. The Biggest Stock Scams Of All Time
    Investing

    The Biggest Stock Scams Of All Time

  3. Thomas Rowe Price: Always Right
    Retirement

    Thomas Rowe Price: Always Right

  4. What did Knight Trading Group do to ...
    Brokers

    What did Knight Trading Group do to ...

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center