The Securities and Exchange Commission is investigating whether Wall Street brokerage firms are leaking valuable trading information to hedge funds in an attempt to get their business.
The inquiry is still in the fact finding stage, according to Lori Richards, who heads the SEC's Office of Compliance Inspections and Examinations.
Richards told CNBC the SEC is acting as "the cop on the beat," following up on complaints by a wide range of mutual fund companies. The mutual funds claim prices have been moving suspiciously ahead of their big orders, suggesting someone else is learning about the orders ahead of the market.
Richards said the Commission has sent letters to a large number of brokerages, asking for information about trades during the last two weeks in September. But she stressed that this is purely fact-finding, and that staff could be crunching data for months.