Exploring Jitney [Finance]: Legal Insights and Implications
Definition & meaning
Jitney is a term used to describe a deceptive practice in the penny stock market. It involves brokers collaborating to artificially inflate trading volume by buying and selling a stock among themselves. This activity creates the illusion of high demand and liquidity, which can mislead other investors. Typically, one broker with direct access to a stock exchange executes trades for another broker who lacks such access.
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In legal practice, jitney activities are often scrutinized under securities law. This term is relevant in cases involving fraud, market manipulation, and breaches of fiduciary duty. Legal professionals may encounter jitney practices in civil litigation related to securities fraud or regulatory investigations by agencies such as the Securities and Exchange Commission (SEC). Users can manage related forms or procedures using resources like US Legal Forms, which offers templates drafted by attorneys.
Key Legal Elements
Real-World Examples
Here are a couple of examples of abatement:
(hypothetical example) A small brokerage firm collaborates with another firm to repeatedly buy and sell shares of a low-volume penny stock. This creates the appearance of significant trading activity, attracting unsuspecting investors who believe the stock is in demand.
State-by-State Differences
Examples of state differences (not exhaustive):
State
Regulatory Approach
California
Strict enforcement of securities laws against market manipulation.
New York
Active monitoring by the SEC and state regulators for fraudulent activities.
Texas
Proactive measures to investigate and penalize jitney practices.
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
Comparison with Related Terms
Term
Definition
Key Differences
Market manipulation
Any action taken to artificially affect the price or volume of a security.
Jitney is a specific type of market manipulation involving collusion among brokers.
Pump and dump
A scheme to inflate the price of a stock to profit from selling it.
Pump and dump often involves misleading information to drive up stock prices, while jitney focuses on trading volume.
Common Misunderstandings
What to Do If This Term Applies to You
If you suspect you are a victim of jitney practices, consider taking the following steps:
Document all relevant transactions and communications.
Consult a legal professional who specializes in securities law for advice tailored to your situation.
Explore US Legal Forms for templates that can help you file a complaint or take legal action.
Quick Facts
Attribute
Details
Typical fees
Fees may vary based on the brokerage; additional legal fees may apply if pursuing action.
Jurisdiction
Federal and state securities laws apply.
Possible penalties
Fines, suspension of trading privileges, and potential criminal charges.
Key Takeaways
FAQs
A jitney refers to a fraudulent practice where brokers collude to inflate trading volume of a stock.
No, jitney practices violate securities laws and can lead to serious legal penalties.
You can report suspected jitney activities to regulatory bodies like the SEC or consult a legal professional.
