A trading (fraudulent trading scheme) that takes place among brokers in a bid to manipulate security prices for their own benefit. One broker sells shares to another who in turn sells to yet another broker and so on. This would result in prices picking up in some steady rise along with the increasing reported volume. Unsuspecting investors would join in and reinforce the loop, pushing up the stock price and trading volume even higher.
Circular trading involves entering sell orders by a broker who is already aware of offsetting buy orders, i.e., those that have been, or will be, entered with the same number of shares at the same time and at the same price.
Comments