Legal Definitions - cross

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.