Wash sales (often also referred to in German as “Wash Sales”)
Transactions prohibited by supervisory law in which purchases and sales or vice versa are made simultaneously in the same contract and on the same exchange on the same date. In fact, no position is taken in this way. However, the impression is created that a purchase or sale has been made (entering into, or declaring to enter into, transactions to give the appearance that purchases and sales have been made, without a change in the trader’s market position). – As a rule, the purpose of sham transactions is to drive up (forward) turnover in order to lure other market participants to enter this sub-market. Due to the vigilance of regulators, sham transactions now hardly occur on controlled exchanges. However, they are not uncommon in offshore financial centers to this day. – See bear raid, blog, bull raid, daimonion, secret tip, trades, collusive, iceberg orders, Internet forums, steam room, corporate mortician, frontrunning, basement exchange, crystallization, price manipulation, market manipulation, Pairoff, prearranged trading, pump and dump, riding exchange, round tripping, scalping, sham buying, snake trading, futures speculator, Twitter, wash sales, angle broker. – Cf. 2001 Annual Report of the Federal Supervisory Office for Securities Trading, p. 27, 2003 Annual Report of BaFin, p. 181, p. 190, 2004 Annual Report of BaFin, p. 174 f. (wash sales fall under the Market Manipulation Concretization Ordinance [MaKonV], which entered into force in March 2005, because they send misleading signals), pp. 186 f. (individual cases), p. 194 f. (further cases), BaFin’s 2006 Annual Report, p. 164 f. (majority of cases uncovered concern over-the-counter securities), and the respective BaFin Annual Report, chapter “Supervision of Securities Trading and Investment Business.”
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
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