The Violet Eye is a secret sect founded by the Kirin Tor of Dalaran to spy on the Guardian of Tirisfal, Medivh, in his tower of Karazhan. Though Medivh is believed to be dead, the Violet Eye remains in Karazhan, defending against the evil that appears to have taken hold in the absence of its master. It is led by Archmage Cedric and reports to the Council of Six. While their part in the activites of Karazhan might be known to some outside the Kirin Tor, they are virtually unknown outside the organization and members prefer it that way.
The Violet Eye was orginally founded to keep watch on the Guardians of Tirisfal, culminating with Medivh and his work in Karazhan. For an extended period of time the Violet Eye was largely forgotten by the Kirin Tor back in Dalaran who were dealing with reconstructing the city, but when the Dark Portal reopened and the energies in the tower began to stir with life once more, the members of the Violet Eye were instrumental in keeping the tower under control and not letting the dark energies escape.
Violet Eye article on Wowpedia.
Archmage Cedric article on Wowpedia.