The Securities and Exchange Commission is investigating whether large brokerage firms are sharing information about big trading blocks, by such companies as large mutual funds, with favored clients, such as hedge funds, sources have told The New York Times, and the SEC itself confirmed.

Specifically, the Commission is looking into how pervasive the sharing of market-moving information is in the financial services industry. Although mutual funds have long complained about brokerage firms’ front-running their trades for their own benefit, brokerages may be sharing customer trading information with other existing or potential customers. Thus, the practice is more difficult for regulators to detect.

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