Illegal to buy and sell stock to yourself?
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Quote from gms:
Good news! My application as a part time Securities Fraud Investigator just got approved and I start tomorrow! Wish me luck!
That sucks. But I'm cool right?
"I once shot a man in Reno, just to watch him die.
Nothing happened to me, either."
"Painting the tape" is trading to create a false sense of the volume traded.. indeed illegal.
When a trade goes off there is supposed to be a change of beneficial ownership... meaning not trading with yourself.
There is about a zero risk of getting caught putting a bid or offer in the market place, and then hitting that with an opposing trade. There is just not enough safe guards to prevent it at most firms, and it can happen as a matter of legitimately trading... e.g. entering a buy vs. sell.
If it happens on accident... just call your broker and ask them to remove the trade form the tape and save yourself the commissions. Exchanges will be hesitant to remove the trade but ECNs will do so without hassle.
When a trade goes off there is supposed to be a change of beneficial ownership... meaning not trading with yourself.
There is about a zero risk of getting caught putting a bid or offer in the market place, and then hitting that with an opposing trade. There is just not enough safe guards to prevent it at most firms, and it can happen as a matter of legitimately trading... e.g. entering a buy vs. sell.
If it happens on accident... just call your broker and ask them to remove the trade form the tape and save yourself the commissions. Exchanges will be hesitant to remove the trade but ECNs will do so without hassle.
It would be illegal for a person who works in a bank, etc. I don't think it is illegal for retail customers. I remember that Morgan Stanley Compliance had to remember to cross orders internally. I.e. if someone in the firm wanted to buy and someone else wanted to sell, they had to cross it internally instead of letting it out in the market. However, they could set up another legal entity, which they did for some applications. So I guess you could buy on one account and sell in another account owned by your spouse, and it would be okay for sure.
Quote from Momento:
That I am pretty sure is illegal. (at least on the floor, the brokers are not allow to do so.)
but on another note, if they cross orders within the brokerage firm like that, will the trade even be printed? It never went thru the market?
It would not be printed, which is why I am partially against the rule if the trade originated from different departments with different goals for their trading.
Felt that they got so ripped-off during the Crash of 1987 that they instituted a new policy of "crossing" trades internally and with other institutions - - - anything to avoid the NYSE.
They are the BIGGEST INDEX FUND in the WORLD with about $800 Billion under management.
I believe that 83% of their trading is now done off the Exchanges.
They are the BIGGEST INDEX FUND in the WORLD with about $800 Billion under management.
I believe that 83% of their trading is now done off the Exchanges.