To some of you, it may see like front running was a yesteryear's issue. With all the compliance and monitoring technology that has been deployed at the regulatory level, you would think there would be obvious disincentives. But the announced $69 million settlement (forfeited profits and penalties) between 14 specialists and the SEC stands that belief on its head, as reported by the New York Times.

All the big names have settled, including units of Goldman Sachs, E*Trade, Knight, TD Options and others. My sense is that the rise of electronic trading has made the specialist business that much tougher. I hope it's not to the point that the only way to survive is to front run. But it's harder than ever to make a living as a specialist. The incentives are still there; frankly, they'll always be. 

For more:
- here's the New York Times article

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