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. Buy

    1. A recommendation to purchase a specific security. A buy rating ...
  3. Churning

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

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

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

    When a broker or advisor buys or sells a security for a client(s) ...
Related Articles
  1. Economics

    Online Investment Scams Tutorial

    To bamboozle someone out of their money is an age-old ruse. Learn about some of the gimmicks modern-day swindlers use and avoid becoming a statistic.
  2. Investing

    The Biggest Stock Scams Of All Time

    Where there is money, there are swindlers. Protect yourself by learning how investors have been betrayed in the past.
  3. Retirement

    Thomas Rowe Price: Always Right

    This great investor mastered a new type of investing with every new market he faced.
  4. Brokers

    What did Knight Trading Group do to incur a $1.5 million fine for violating trading rules?

    The dotcom boom accelerated many deceitful business practices that first became apparent during the '80s and '90s. Many of these had to do with analyst recommendations being tied with investment ...
  5. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
    Professionals

    What is a SWOT Analysis?

    SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis is a management tool used to identify strategies for success. It may be used to guide individual thinking, group ...
  6. Spread betting is a speculative practice that began in the 1940s as a way for gamblers to win money on changes in the line of sporting events. But by 1970, the phenomenon trickled into the financial markets, where the use of leverage provided speculators with a way to earn (or lose) big profits with very little upfront money.
    Trading Strategies

    Why Is Spread Betting Illegal In The US?

    Spread betting is a speculative practice that began in the 1940s as a way for gamblers to win money on changes in the line of sporting events. But by 1970, the phenomenon trickled into the financial ...
  7. Investing

    What are Business Ethics?

    Business ethics is the system of laws and guidelines by which business professionals and corporations operate in a fair, legal and moral fashion. It’s a broad topic, covering everything from ...
  8. What's a monopoly?
    Economics

    How a Monopoly Works

    In economics, a monopoly occurs when one company is the sole (or nearly sole) provider of a good or service within an industry. This potentially allows that company to become powerful enough ...
  9. Investing

    What's the difference between legal defalcation and illegal defalcation?

    Discover what is meant by the term ''defalcation'' and how it can be used in multiple contexts to describe illegal or legal activities.
  10. Financial advisors must lead the charge against cybersecurity risks, for their clients and for their own practices.
    Investing News

    Educating Your Clients About Cybersecurity

    Financial advisors must lead the charge against cybersecurity risks, for their clients and for their own practices.

You May Also Like

Hot Definitions
  1. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  2. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  3. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  4. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  5. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
  6. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
Trading Center