There are a massive number of HFT shops. Most of these are prop-shops rather than funds, as in they trade their own money and don't take investors. They are physically unable to front run their customers because they simply don't have customers.
I will give you that there are some big banks getting into HFT now, and that's a different story, but a statement like "HFT in its worst form amounts to high speed computerized rumor mongering." is wildly inaccurate and shows a complete lack of understanding of the industry.
Furthermore, there is a massive difference between algo trading and HFT. Technically speaking, yes, HFT falls under algo. However, HFT is about speed and making very little profit many times throughout the day, usually by providing liquidity.
Algos on the other hand, especially things like high end models aren't meant for HFT because they take larger amounts of time to run (ie: backtesting). These are used (for example) to determine misprices in the market that will pay off heavily in the long term, or (as others have mentioned below) to buy/sell a large quantity of shares in a way that it won't move the market in the other direction, rather than make an immediate, albeit tiny, profit.
I understand the industry quite well and from experience. BTW My only daggers were aimed at HFT.
Let me be clear. Anybody that puts an order in not expecting to get executed but to create favorable conditions for their next order is engaging in what I call "high speed rumor mongering". There are lots of variations of this game. Never happens? Always happens? You tell me.
But markets aren't chess. "Rumor-mongering" is a legal term I chose on purpose. It is generally prohibited because it destroys liquidity in markets, which hurts investors and issuers. The term is intentionally objectionable, but not inaccurate. Just don't trouble the regulators to figure it out.
OP's misunderstanding of prop trading vs funds aside, I still think it can be argued that "HFT in its worst form amounts to high speed computerized rumor mongering".
For instance, take a look at the Nanex article What is the Bid/Ask spread of this stock? [1]. Rumor mongering in this case being gaming the weakness of the NBBO.
On a side note, I highly recommend reading through Nanex's Strange Days research section if HFT related market anomalies interests you at all [2].
I will give you that there are some big banks getting into HFT now, and that's a different story, but a statement like "HFT in its worst form amounts to high speed computerized rumor mongering." is wildly inaccurate and shows a complete lack of understanding of the industry.
Furthermore, there is a massive difference between algo trading and HFT. Technically speaking, yes, HFT falls under algo. However, HFT is about speed and making very little profit many times throughout the day, usually by providing liquidity.
Algos on the other hand, especially things like high end models aren't meant for HFT because they take larger amounts of time to run (ie: backtesting). These are used (for example) to determine misprices in the market that will pay off heavily in the long term, or (as others have mentioned below) to buy/sell a large quantity of shares in a way that it won't move the market in the other direction, rather than make an immediate, albeit tiny, profit.