I wonder if a principal owner of a prop firm also trades, isn't that a conflict of interest. Would you feel comfortable if say people at large online brokerage firm looked over their customer's accounts and traded off that info. Does this happen?
I have yet to meet an owner or risk manager at a prop firm that didn't trade. As far as your brokerage example, I think that would fall under non-public information regulations and would be illeagle. The brokerage industry is much more heavily regulated due to the fact that you are dealing with public customer accounts not traders who are either employees or independent contractors.