Front running is an immoral trading practice where a broker or businessman executes the orders for its own account based on the advance knowledge of the pending orders of the customer. This practice usually occurs when a broker learns about an important order that intends to have a customer, which is likely to affect the price of security. The broker can then buy or sell security for himself before executing the customer's order, which can earn profits from price movement.
Front running is considered a violation of Fiduri duty, as brokers are expected to work in the best interests of their customers. This is illegal in several courts, including strict punishment on violations with regulatory bodies such as the US Securities and Exchange Commission (SEC), including fines and loss of trading license.
This practice reduces market integrity and can increase instability by eradicating investors. To maintain a fair and reliable business environment, it is necessary for brokers and traders to follow moral standards and prioritize the interests of their customers on personal gains.
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