The S.E.C. announced today that they were investigating the major Wall Street wirehouses for informing hedge funds of large transactions the wirehouses were going to make on behalf of other clients i.e., mutual funds. The hedge funds would then be able to profit from taking positions prior to their execution by the wirehouses.
This is an end run of the front running laws that are on the books. Front running laws state that it is illegal for a brokerage firm to jump ahead of a client's order with their own to profit from the subsequent move in the price of the stock or commodity.
In this case the hedge fund benefits from the advanced knowledge and in return enriches the brokerage firm with increased future business. In the very least they are abrogating their fiduciary responsibilities to their clients and are responsible for their clients not receiving the best price for their trade.