Painting The Tape

What does 'Painting The Tape' mean

Painting the tape is a form of market manipulation whereby market players attempt to influence the price of a security by buying and/or selling it among themselves so as to create the appearance of substantial trading activity in the security. Painting the tape is an illegal activity that is prohibited by the Securities and Exchange Commission because it creates an artificial price for a security. The term originated in a bygone era when stock prices were largely transmitted on a "ticker tape."

BREAKING DOWN 'Painting The Tape'

Two common objectives among market manipulators of painting the tape are to lure unsuspecting investors into a security, or achieve a high closing price for it.

Unusual trading volume in a security may attract investors to it. Cabals of market manipulators who have painted the tape in a security generally expect to make significant profits by offloading their holdings in it - which are usually acquired at much lower prices - to investors unaware of the stock manipulation. These investors are literally left "holding the bag" once the manipulation ceases and the stock declines steeply in price.

High closing activity attempts to create an artificial price for a security by boosting its price substantially at market close, since closing prices are widely reported in the media and are closely watched by investors. Since most portfolios and securities are valued on the basis of their closing prices, manipulators use this tactic to achieve a higher market value for their holdings rather than their intrinsic worth.

RELATED TERMS
  1. Manipulation

    The act of artificially inflating or deflating the price of a ...
  2. Fighting The Tape

    The action of placing a trade or trades that go against the ticker ...
  3. Broad Tape

    A modern version of the ticker tape produced by the Dow Jones ...
  4. Consolidated Tape

    An electronic program that provides continuous, real-time data ...
  5. Ticker Tape

    A computerized device that relays financial information to investors ...
  6. Digits Deleted

    A designation on an exchange's ticker tape that refers to the ...
Related Articles
  1. Investing

    Understanding The Ticker Tape

    We explain the meaning and use of that reel of symbols whizzing across your TV or computer screen.
  2. Investing

    Financial Statement Manipulation An Ever-Present Problem For Investors

    The SEC has taken steps to eliminate this type of corporate fraud, but it remains a real risk for investors.
  3. ETFs & Mutual Funds

    A Legendary Market Skill Experience Traders Have

    Tape readers interpret complex background data during the market day to gain a definable trading edge over the competition.
  4. Investing

    How Financial Statements Are Manipulated

    Financial statement manipulation is an ongoing problem, and investors who buy stocks or bonds should be aware of its signs and implications.
  5. Markets

    Quantitative Easing vs. Currency Manipulation

    In theory, quantitative easing and currency manipulation aren't the same thing, but it's much more difficult to tell one from the other in practice.
  6. Investing

    How Deutsche Bank Market Manipulation Impacts Investors (DB)

    Explore the ramifications of Deutsche Bank's admission that it manipulated gold and silver from 2007 to 2014, including its similarities to other schemes.
  7. Trading

    5 Reasons Why Currency Manipulation Matters for Average Investors

    Find out why the Treasury Department identified five potential offenders of currency manipulation, and see how this affects investors in the United States.
  8. Trading

    The Short and Distort: Stock Manipulation in a Bear Market

    High-quality stock reports needn't be confused with stock manipulators' dramatic claims.
  9. Markets

    How Currency Enforcement Helped Sink The Trans-Pacific Partnership (TTP)

    One particular barrier to trade that has received much attention of late and caused delays in negotiations of the TPP is exchange-rate manipulation, by which a country artificially devalues its ...
  10. Investing

    Look For These Red Flags In The Income Statement

    Companies can overstate their revenues and understate their losses to boost investor confidence. Learn how to spot the these red flags in income statements.
RELATED FAQS
  1. Do traders, market makers, specialists or others ever deliberately drive a stock's ...

    Many individual investors have had the experience of closing their position in a stock only to see the price rebound moments ... Read Answer >>
  2. Is teaming up with other traders to raise the price of low cap/penny stocks illegal?

  3. Which of the following equity trades would appear on the ticker ...

    Free info on financial certification exams including study guides, exam questions, and much more! Read Answer >>
  4. What's the difference between primary and secondary capital markets?

    Learn how in the primary capital market, securities are issued for the first time, while in the secondary market, investors ... Read Answer >>
  5. Why is overhead cost allocation sometimes manipulated on an income statement?

    Learn why companies sometimes manipulate overhead costs to boost the appearance of overall profitability, and other reasons ... Read Answer >>
  6. What are the characteristics of a marketable security?

    Find out what it takes for a financial asset to be considered a marketable security, including its liquidity, intent of use ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center