The SEC is investigating whether some of Wall Street's top investment banks are using inside information. Fortune's Shawn Tully explores the potentially explosive scandal.
(Fortune Magazine) -- In early February, the SEC confirmed that it was investigating whether the major brokerage houses were tipping off hedge funds to the trades the brokers handle for big clients like mutual funds. If that's happening, it would be a scandal.
The SEC is also likely to scour trading records to see if the brokers are using info about clients' moves to invest their own capital. If the SEC finds evidence that they are, the scandal would be enormous - and go to the heart of Wall Street's profit machine.
By Shawn Tully, Fortune editor-at-large
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