Legal Definitions - cross

"Cross" primarily refers to cross-examination, which is the questioning of a witness by the opposing attorney in a legal proceeding. It also describes a "cross trade," a large transaction involving publicly traded stock sold directly between two private parties, typically requiring exchange permission even though it occurs off the exchange floor.

The term "cross" has two distinct meanings in a legal and financial context:

• 1. Cross-Examination

  In a legal proceeding, "cross" is often used as a shortened form of cross-examination. This refers to the process where a lawyer questions a witness who was initially called to testify by the opposing side. The primary purpose of cross-examination is to test the credibility of the witness's testimony, clarify facts, or highlight inconsistencies in their statements.

  • Example 1 (Criminal Trial): During a murder trial, the prosecutor calls an eyewitness who claims to have seen the defendant near the crime scene. After the prosecutor finishes their direct questioning, the defense attorney then conducts a "cross" of the eyewitness, asking detailed questions about their vantage point, the lighting conditions, and any potential biases, aiming to challenge the reliability of their identification.

    Explanation: Here, the defense attorney is questioning a witness presented by the opposing side (the prosecution) to scrutinize their testimony, which is the core function of cross-examination.

  • Example 2 (Civil Lawsuit): In a lawsuit concerning a defective product, the plaintiff's lawyer calls an engineer to testify about the product's design flaws. The defendant company's lawyer then performs a "cross" of the engineer, questioning their qualifications, the methods used in their analysis, and whether other factors might have contributed to the product's failure.

    Explanation: The defendant's lawyer is challenging the expert witness presented by the plaintiff to undermine the claims of design flaws, which is a typical application of cross-examination.

• 2. Large Block Stock Transaction

  In finance, a "cross" refers to a transaction involving the sale of a large quantity of publicly traded stock directly between two private parties, such as institutional investors, rather than through the regular trading mechanisms of a stock exchange. While these transactions occur "off-exchange," they typically require permission from the relevant stock exchange or regulatory body due to their significant size and potential market impact.

  • Example 1 (Institutional Investment): A major pension fund decides to significantly reduce its holding in a particular pharmaceutical company. Instead of selling its 3 million shares gradually on the open market, which could depress the stock price, it arranges a direct "cross" sale of the entire block of shares to a large hedge fund that is looking to increase its long-term investment in the pharmaceutical sector.

    Explanation: This illustrates a large, direct transfer of shares between two institutional investors outside the standard exchange trading, which is a "cross" transaction.

  • Example 2 (Corporate Divestiture): A private equity firm that owns a substantial minority stake (e.g., 15%) in a publicly traded retail chain decides to exit its investment. It finds another investment group willing to acquire its entire holding in one go. This transfer of a significant block of shares directly from the private equity firm to the new investment group is executed as a "cross."

    Explanation: The sale of a large percentage of a company's shares directly from one private entity to another, bypassing the public exchange for that specific block, defines a "cross" in this financial context.