Anthony @ Equity Investigations, Dear Anthony, Message Board

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

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To: rogermci® who wrote (1132)	12/20/1998 12:53:00 AM
From: nihil	Read Replies (2) of 122087

re: front running I believe that front running does not necessarily involve selling the stock, and that mere buying in advance of your clients to gain a price advantage is illegal. That was the charge against many public brokers in Chicago a few years ago. I believe that front running is a violation of exchange rules, and applies only to exchange members and not to customers. (Of course, an offender may be charged with offenses in court). A legitimate adviser is nearly always involved in front running by your definition since he first buys the stock and, thrilled at his success in picking a good 'un then advises his clients to buy it, and at some point he sells. He has no obligation to warn his clients that he is may sell, although it is a good idea to tell them as soon as he has sold. It is probably a bad idea to enter a limit order to sell his holding at a higher price before advising the clients. The offense of front running requires prior knowledge by a broker of specific orders. I don't see how an adviser who is not a broker can violate the exchange rule against. In contrast, free riding is an offense by a customer.

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