Painting The Tape


DEFINITION of 'Painting The Tape'

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.

  1. Ticker Tape

    A computerized device that relays financial information to investors ...
  2. Print

    The execution of a trade. The term print originates from the ...
  3. Matching Orders

    The process for executing securities trades by pairing buy orders ...
  4. Fighting The Tape

    The action of placing a trade or trades that go against the ticker ...
  5. High Close

    A tactic used by stock manipulators; they make small trades at ...
  6. Tape Is Late

    A situation on the trading floor where trading volume is so heavy ...
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