Simple English definitions for legal terms
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Stock-parking is when someone sells securities with an agreement to buy them back later for a similar price. This is sometimes done to avoid certain regulations or taxes. It can also refer to temporarily placing assets in a safe investment while considering other investment opportunities.
Definition: Stock-parking is the act of selling securities with an agreement to buy them back at a later time for a similar price. This is often done to evade securities regulations or tax laws. However, it can also refer to the placement of assets in a safe, short-term investment while considering other investment opportunities.
Example 1: A brokerage firm sells stock from its own account to a customer at market price to avoid the discount for reporting purposes. After filing its report, it buys the shares back from the customer at the same price, plus interest. This is an illegal form of stock-parking.
Example 2: An investor places their money in a money market fund while they research other investment opportunities. This is a legitimate form of stock-parking.
Both examples illustrate the definition of stock-parking. Example 1 shows how stock-parking can be used to evade securities regulations, while Example 2 shows how it can be used as a safe, short-term investment strategy.