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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony,

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To: Pogeu Mahone who wrote (89479)1/21/2005 9:09:55 AM
From: Jeffrey S. Mitchell  Read Replies (2) of 122087
 
Here is all that I found published related to front-running:

Elgindy's lawyer Isaacson questioned Hansen Tuesday and highlighted how the witness' story changed over time. "Did you indicate to the grand jury that you didn't think that (Elgindy) would front run?" Isaacson asked Hansen. Hansen had told jurors Monday that he thought that Elgindy would trade ahead of the advice he would give members of his Web site, a practice known as front running. On Tuesday, Hansen answered Isaacson's question by saying: "my understanding is that he didn't trade against the site. But I think he may have."
Message 20830389

Front running doesn't make much sense when you possess news that the CEO is either a convicted felon or under investigation by the FBI as such information can cripple a company's stock for an extended period of time. That's why scalping has been alleged instead (trading on advanced knowledge of a material event).

Where covering while yelling "short" does make sense is in situations similar to pump and dumps-- where a stock spikes on either hype or overreaction to good news. The reasoning is that, unlike pump and dumps, you didn't manufacture the situation and you truly think even people a little late to the party can make money. So is that front-running? As per the above, I think even Hansen doesn't quite know how to characterize it.

- Jeff
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