Is it against the law to sell stock in one account and buy it in another?

Discussion in 'Investing' started by PrinceOrloff, Sep 20, 2020.

  1. PrinceOrloff

    PrinceOrloff New Member

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    I have some stock in a non IRA account that I would like to put in an IRA. Of course, stock can't be transferred directly that way. The usual way is to liquidate the stock in the non IRA account, transfer the cash to the IRA, and then rebuy the stock.

    What if I skipped a step by buying some or all of the stock using cash that I already have in the IRA by entering a buy limit order at Price X for that stock in the IRA and then entering a sell limit order at Price X for the same stock in the non IRA? Conceivably I might be buying my own stock from one account to the other. Is there any law against that?
     
  2. Onepoint272

    Onepoint272 2019 Stockaholics Contest Winner

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    I'd say no, you'd be selling and buying at the market, but then I wouldn't consider doing that; I'd take the opportunity to improve my position, i.e., a good time to sell is not at the same time a good time to buy. But if you feel like you have absolutely no trading skills, no sense of timing the market, then I can understand why you would do it that way.
     
  3. A55

    A55 Well-Known Member

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    No law against buying and selling stock.

    Conceivably, you could enter your sell order at Price X + $, and enter your buy order at Price X -$. Then you have made a profit. As every stock has some volatility during the trading day. You could.capture the difference. Say you sell it at $20.50 and buy it at $19.50. You have a million shares. You made a million dollars.
     
  4. B Russ

    B Russ Well-Known Member

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    Isnt it also like.....there are millions of shares? U arent selling yourself your own shares. thousands if not 10s of thousands of shares trade hands per second. Odds of u selling yourself your shares, i imagine would be close to big bang.
     
  5. PrinceOrloff

    PrinceOrloff New Member

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    Thanks for the worthless advice, assholes. I got called out by my brokerage for those orders. You're not allowed to be both buyer and seller on the same transaction. They said I could be accused of painting the tape, trying to manipulate the stock price. I was lucky that the orders executed at the same price the stock had been trading at lately.

    Why don't you try responding only when you know something instead of just talking big to make people think you do?
     
  6. TomB16

    TomB16 Well-Known Member

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    Hello PrinceOrloff.

    It's interesting that someone called you to tell you that you almost got in trouble. I've never heard of a trader contacting a retail investor under any condition. The most I've heard of is a brokerage discarding orders without any sort of communication.

    I've bought and sold stock at the same time for the purpose of transfer. Years ago, it was cheaper to pay for two online orders than it was to pay for someone to transfer the stock in kind. There was never any trouble.

    As well as that, it would be difficult for someone to accuse you of manipulating a stock price with market orders. If you entered limit orders, it would still be an untenable position for regulators to accuse you of, if the buy and sell straddled the last transaction price at the time of order entry.

    BTW, I didn't respond because I wasn't 100% sure of the law. I am 100% sure you wouldn't get in trouble unless you were buying and selling a significant portion of the float, if even then. Some dude buying and selling a few thousand shares isn't going to ring any alarms and there's no way you were transferring millions of dollars of stock into your ira.

    The odds of post #5 being legit seem infinitesimal to me. What country are you prince of, again?
     
    #6 TomB16, Oct 19, 2020
    Last edited: Oct 19, 2020
  7. TomB16

    TomB16 Well-Known Member

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    Perhaps the purpose of this thread is not in vein.

    If this thread was intended to point out that people answer, pretending to know something when they do not, this is clearly the case. I've noticed it a few times.

    PrinceOrloff seems to be an unwitting clown, caught in his own trap.

    If you want to be the toughest guy in the room and you call out everyone there, you should probably bring a lot of game or you will look like a clown.

    People online pretend to have more success and knowledge than they do. It's almost universal. For those of us who engage in offline discussions on any topic, we find the same. I used to work in a building full of people who got rich from bitcoin. No one ever lost money. I've had horrible information from order desk staff, also. Just ask any order desk person about the mechanics of debentures and you will hear a stream of vagaries and parachute statements.

    This isn't a problem for this site specifically. Actually, I find this site to be pretty decent, perhaps better than most other places.

    As adults, our job is to filter the information we ingest, with regard to reasonableness.

    This site has so much excellent information, vastly more accurate than other sources, that an occasional overstep is more than understandable

    Best wishes PrinceOrloff. Perhaps you are a productive poster when you use your other alias. For what it's worth, I have no issue with this thread or its purpose. I think the outcome was as it should be. Kind regards.
     
  8. WXYZ

    WXYZ Well-Known Member

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    NEXT TIME........why not just call your broker and ask them? OR.........look it up for yourself on the internet? Who would do a trade that they are concerned might not be legal.....based on advice from a message board on the internet?

    YOU remind me of all the current ROBINHOOD TRADERS......with ZERO customer service or ability to contact their broker by phone.

    This situation will probably be noted.........."on your permanent record". (sarcasm, sorry could not resist)
     
    Onepoint272 likes this.
  9. A55

    A55 Well-Known Member

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    In all fairness, we don't know. He could have moved $$$,$$$,$$$ in that transaction. Maybe he has Warren Buffett money, that one deal actually caused market volatility, and his broker talks to him all the time.

    We don't know. I don't care. No jealousy that my brokerage never calls me.

    I would rather know what Billie Eilish looks like under those baggy outfits.
    I doubt if Robin Hood called him.
     
  10. A55

    A55 Well-Known Member

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    Screenshot_2020-10-18-20-01-52.png Screenshot_2020-10-18-20-02-17.png
     
    TomB16 likes this.
  11. TomB16

    TomB16 Well-Known Member

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    I'm skeptical the prince is contributing $100K, when the annual contribution limit is $6K but it's possible. No way he's contributing a million.

    If the OP is contributing $100K, using limit orders that are far from the bid/ask, and targeting a tiny cap stock with extreme low volume, he could probably impact the price quite a bit for a few days.

    Also, the buy/sell limit orders could well be illegal but it's a pretty remote corner case. All he would have to do is keep the limit orders on or near the bid and it would go through unnoticed.

    The OP makes a fair point. We shouldn't respond if we don't know. I just think it's an over reaction. Surely, this must be a response to a hostile exchange unrelated to this question.
     
  12. PrinceOrloff

    PrinceOrloff New Member

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    At xxxx, we always want to be sure you know the relevant rules and regulations governing the trading and positions you hold in your account. In particular, we want you to be aware of the practice known as manipulative trading.

    Possible Manipulative Trading in Your Account

    We are bringing this up because an instance of manipulative trading may have occurred in your account(s).

    On September xx, 2020 at 11:xx:22, xxxx shares was executed at a price of xxxx per contract. Buy Order #: xxxxxxxxxx Sell Order #: xxxxxxxxx.

    The trade(s) appears to constitute wash or matched trading, as it resulted in no change in beneficial ownership and/or was conducted in accounts under common control or discretion.

    Manipulative trading practices constitute a serious violation of exchange trading rules. Sometimes traders unknowingly use a strategy that may involve manipulative trading. You can help avoid this, and the potential penalties resulting from it, by familiarizing yourself with the subject. Your business is important to us, and we want to assist you with some useful information.

    What Are Manipulative Trading Practices?

    Manipulative trading practices include, but are not limited to, transactions for the purpose of:
    - Creating or inducing a false, misleading, or artificial appearance of activity in the market.
    - Unduly or improperly influencing the market price.
    - Setting a price that does not reflect the true state of the market.
    - Trades that result in no change in beneficial ownership.
    - Pre-arranged trading with other parties.

    Terms commonly used to describe manipulative trading practices include: wash trades, matched trades, painting the tape, and spoofing.

    What Penalties Are Involved?

    Accounts directly or indirectly engaged in manipulative trading practices may be subject to trading restrictions, account closures, and/or regulatory penalties. We urge you to be careful not to engage in the sort of trading activity described above in order to avoid these penalties in the future.

    We're Here for You

    We encourage you to contact us via email. Please reply to this message to communicate with a representative from the Block Desk.

    Block Desk
     
  13. TomB16

    TomB16 Well-Known Member

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    Are you posting this from jail?

    So, you caught the attention of a security bot and now you're trying to make a point or somehow prove yourself right? I'm not sure I understand the purpose of your post.


    Incorrect. Stock can be transferred "in kind" to a different account.

    My broker used to charge a premium for activities that need to be done by a person. It was cheaper for me to sell in an unsheltered account and re-purchase in a sheltered account, so I've done that a few times over the years. I'm prison free so far, but I'll keep you aprised.

    In order to be prosecuted successfully, the IRS will have to show damage or manipulation. If you place buy and sell orders near the current bid, they will have a difficult time getting a conviction. I am not saying it's legal specifically.
     
  14. Bridget Mallory

    Bridget Mallory Active Member

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    Is it what you call day trading?
     
  15. Akwin

    Akwin Member

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    I am pleased to ask you, how long I have to wait to buy the stock after selling it?
     
  16. JTuber

    JTuber Member

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    For buying and selling stocks, you don't have to wait. You can buy right now and once you have the shares you can turn around and sell them immediately. Then after you sell them you can immediately buy them again. The only sticky point is if you sell at a loss. Then you have capital loss you can claim on your tax return (if you want to claim the loss, it's optional). If you sell at a loss, you should wait for 31 days before you buy the same stock again due to the wash sale rule. If you sell for a profit, then go wild, buy sell buy sell buy sell ...
     
  17. JTuber

    JTuber Member

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    I doubt the "prince" has $$$$$$ to invest. If he did, then he would have an army of people who are way smarter than he is to manage his money for him.

    I am not sure about the Manipulative Trading Law he posted. I am not familiar with it or even know if it is legit. However one point in that post caught my eyes. That is "Trading w/o changes in beneficial ownership". If I have 1 trading account, own some XYZ stocks and if I enter a buy order for XYZ stock at $100 and before that buy order is fulfilled, I immediately enter a sell order of XYZ stocks for $100, I guess that would raise a red flag with the broker because to the broker that could be suspicious activities that would cause the broker to lose money due to commission (if I get free trades). However, if I have an IRA account and a taxable account, can I sell my XYZ in my taxable account and also enter a buy order in my IRA account? Why not? They are different accounts and their tax reporting is different. It is not like I am moving my money from my taxable into my IRA. What happens if I have 2 brokers with taxable account in each? Can I sell XYZ in broker 1 and buy XYZ in broker 2 at the same time? Why not???

    I am not even sure if the "prince" is legitimate.
     

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