Quid Pro Quo


DEFINITION of 'Quid Pro Quo'

A Latin phrase meaning "something for something". This term is typically used in financial circles to describe a mutual agreement between two parties in which each party provides a good or service in return for a good or service.


Quid pro quo agreements are sometimes viewed negatively. For example, in a quid pro quo agreement between a large financial house and a company, the financial house might alter poor stock ratings in exchange for company business. In response to these potential occurrences, the NASD has issued rules in order to ensure that firms put customers' interests before their own.

A positive example of a quid pro quo agreement is a soft dollar agreement. In a soft dollar agreement, one firm (Firm A) uses another firm's (Firm B) research. In exchange, Firm B executes all of Firm A's trades. This exchange of services is used as payment in lieu of a traditional, hard dollar payment.

  1. Pro-Tanto

    A Latin phrase meaning "for so much" which is often associated ...
  2. Allotment

    During an IPO, this is the number of shares granted to each participating ...
  3. Anti-Reciprocal Rule

    A rule created by the Financial Industry Regulatory Authority ...
  4. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
  5. National Association Of Securities ...

    The NASD was a self-regulatory organization of the securities ...
  6. Soft Dollars

    A means of paying brokerage firms for their services through ...
Related Articles
  1. Fundamental Analysis

    Understanding Pro-Forma Earnings

    These figures can either shed light on a company's performance or skew it. Find out why.
  2. Entrepreneurship

    Identifying And Managing Business Risks

    There are a lot of risks associated with running a business, but there are an equal number of ways to prepare for and manage them.
  3. Stock Analysis

    McDonald’s Vs. Burger King: Comparing Business Models

    Learn how Burger King is turning the tables on McDonald's, and adding another fascinating chapter to a story of one of the most iconic business rivalries of all time.
  4. Stock Analysis

    Samsung Vs. Apple: Comparing Business Models

    Read an in-depth review of competing business models in the tech industry, including how Apple and Samsung are redefining corporate warfare.
  5. Professionals

    5 Must-Watch Films and Documentaries for Business Students

    Understand why it is important for business students to watch relevant films and documentaries. Learn about the top films that business students should watch.
  6. Investing

    How To Create a Winning Elevator Pitch

    Whether you are talking to potential investors, partners, customers or employees, the skill of being able to concisely summarize your business is critical.
  7. Professionals

    Hard and Soft Due Diligence: What's the Difference?

    Learn about the differences between "hard" and "soft" due diligence in a mergers and acquisitions deal (M&A) and why soft diligence is increasingly important.
  8. Economics

    What Does a Relationship Manager Do?

    A firm’s relationship manager works to maintain positive relationships with its customers and partner firms.
  9. Economics

    What's Involved in Quality Management?

    Essentially, quality management entails overseeing all activities and tasks needed to maintain excellence.
  10. Stock Analysis

    Salesforce and SAP: Don’t Expect the Same From Both

    Take a look at the similarities and differences between SAP and Salesforce in the customer relationship management (CRM) software marketplace.
  1. Can a business charge me an extra fee for paying with my credit card instead of cash?

    In some states a business is permitted to charge an extra fee for customers paying with credit cards instead of cash. This ... Read Full Answer >>
  2. How does FINRA differ from the SEC?

    With all the financial organizations out there, knowing what they all do can be as complicated as knowing where to invest. ... Read Full Answer >>
  3. What are soft dollars?

    The term soft dollars refers to the payments made by mutual funds (and other money managers) to their service providers. ... Read Full Answer >>
  4. How are joint ventures regulated in the United States?

    Joint ventures are a very specific type of business arrangement. They can be organized in several different legal structures, ... Read Full Answer >>
  5. How long does it take to execute an M&A deal?

    Even the simplest merger and acquisition (M&A) deals are challenging. It takes a lot for two previously independent enterprises ... Read Full Answer >>
  6. How do a corporation's shareholders influence its Board of Directors?

    The 21st century has seen a rapid increase in shareholder activism, such as the general awareness, involvement and influence ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center