Accommodation Trading

  

Categories: Investing, Stocks, Bonds

Foul! We cry it. Accommodation Trading is illegal. Two traders agree to transact in non-fair-market-values, as one sells a stock below market just before Santa takes his spin...and then, a month later, the accommodating trader sells back that stock well below market prices just to be a nice guy, so that the first guy can recognize a tax loss.

You go to jail for this stuff, and licensed traders get asked about it all the time. The accommodation notably is always such that the trade takes a month to hit the return valve, thus not triggering the wash sale rule and nullifying the tax loss. So like...do you really want the IRS coming after you? Yeah, good luck with that. For more gory details, see Painting The Tape.

Related or Semi-related Video

Finance: What is suspended trading?0 Views

00:00

Finance allah shmoop what is suspended Trading All right Next

00:07

up this snazzy pair of lavender suspended We'll start the

00:09

bidding at fifteen dollars Fifteen in the back Can i

00:11

get twenty Twenty twenty for the woman in the pink

00:13

jacket twenty five Do i hear twenty five Alright we're

00:16

switching to decaf No Okay So what really is suspended

00:20

trading trading in a security that is stopped suspended as

00:24

if in mid air like those chinese acrobats Well the

00:28

big question here why was trading suspended Could be one

00:31

of many reasons the company didn't provide proper financial documentation

00:36

in their quarterly report so the auditors didn't sign off

00:39

Ouch Yeah Not normally Bullish for a stock or company

00:43

is found guilty of fraud Or the ceo was caught

00:47

on tape holding squirrel fighting matches in his basement All

00:51

right Well the nineteen thirty four act gave the sec

00:53

the right to suspend trading for ten days now pretty

00:57

much any time they reasonably thought it necessary to protect

01:00

irving q investor And when this happens it's oh so

01:04

not good for the company in question The suspension itself

01:08

stops trading in the stock usually causing at least gentle

01:12

Panic among the myriad nervous nellie penguins out there just

01:16

dying to sell their stock But they can't because trading

01:19

is suspended and they get incrementally more nervous is the

01:22

minutes go by such that it well it makes them

01:25

do this So how does the pain end Euthanasia No

01:29

generally a standard form suspension last for ten days And

01:33

then it's done the thought being that if a company

01:35

takes longer than ten days to get its compliance act

01:39

in order well then seriously worse things were involved in

01:42

other agencies will probably then come to play Think fbi

01:46

the default tend a lapse may happen and then the

01:49

security is unsuspected presumably with company going on and on

01:53

and on endlessly about what happened and why and how

01:56

and how it will never happen again knowing that a

01:58

bunch of ambulance chasing lawyers from new york city will

02:01

sue them for not having filed properly the form from

02:04

the division in somalia and now the company according to

02:07

the lawyer zoe's shareholders eighteen billion dollars hopefully for the

02:12

company there payable in somalia in dollars or shareholders are

02:15

going to work out some kind of suspender trade Yeah 00:02:18.39 --> [endTime] About that

Up Next

Finance: What is Painting The Tape?
26 Views

Painting the tape is an illegal way to manipulate stock prices. And yes, it’s still illegal, even if you paint it super pretty.

Finance: What is Selling Away?
8 Views

Selling away is the practice of selling securities that aren't under the seller's auspices to sell.

Finance: What are Unsuitable Recommendations?
0 Views

What are unsuitable recommendations? Hit play to find out, and trust us when we say that that's a suitable recommendation.

Find other enlightening terms in Shmoop Finance Genius Bar(f)