When someone uses non-public information about a future trade to buy or sell a security before that information becomes public. For example, a broker might buy shares before executing a large client order that will drive the price up. This is illegal because it gives certain people an unfair advantage.
A fund manager plans to buy 1 million shares of Company X tomorrow, which will likely push the price up. If a broker learns about this plan early and buys shares for their own account before the order executes, they profit unfairly at the client's expense. This is front running and is against the law.
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