Goldman Sachs and Forward Trading

This dkos diary says:

Over the past 48 hours, we're now hearing from many financial services professionals, and they're alluding to the reality that "frontrunning," the illegal practice of jumping ahead of legitimate stock/bond/equity trades to capitalize upon them, is pretty much a common practice; one that has run rampant throughout Wall Street for a very long time.

And the story has Goldman Sachs leading the charge!

What is frontrunning?

Wikipedia explains it:

Frontrunning is the illegal practice of a stock broker executing orders on a security for its own account while taking advantage of advance knowledge of pending orders from its customers. When orders previously submitted by its customers will predictably affect the price of the security, purchasing first for its own account gives the broker an unfair advantage, since it can expect to close out its position at a profit based on the new price level. Front running may involve either buying (where the broker buys for their account, before filling customer buy orders that drive up the price) or selling (where the broker sells for its own account, before filling customer sell orders that drive down the price).

We are told that Goldman Sachs has visibility of the entire exchange and is able to execute transactions faster, so in the time between your trade starts and your trade completes, They are able to complete their own transaction.