It seems that every once in a while securities professionals need to be reminded that conduct that they think is done in the “ordinary course of business” is actually a securities law violation, with significant consequences.
Today’s reminder is directed at Wall Street traders – arranging for another trader at another firm to take your position for a few days, with an agreement to buy it back is illegal.
Traders have been doing this for years, and apparently the practice is so widespread that many traders do not give it a second thought – until the trade blows up. A few years ago I represented a trader who agreed to hold a position for a fellow trader over the end of the month. The friend needed to reduce his position for month end. The trader-friend asked my client to buy the position, and agreed to purchase it back in four days at a small increase in price.
Read more at The Securities Law Blog – http://seclaw.blogspot.com/2014/04/reminder-parking-stock-is-illegal.html