What is a Wash Sale?

Wash sale (also known as false sale, flush sale, or false sale), it is the oldest form of manipulation of the securities market, that is, to artificially create false prosperity in securities trading for the purpose of influencing the market conditions of securities and engage in ownership Transactions that are not real transfers.

Wash sale

"Laundry": aka

In the stock markets of Western countries, there are many ways of laundering:

1. The earliest method is that both parties to the transaction simultaneously entrust the same broker to declare purchases and sells to each other on the stock exchange, and to buy and sell each other without any securities or money delivery.

2,

1. The actor has a subjective false prosperity in the securities market and induces public investors to follow up blindly, thereby achieving the purpose of manipulating the market.

Article 9 (1) (1) of the United States Securities Exchange Act of 1934 stipulated that the laundering must have the intention of "creating an untrue or sufficiently misleading misunderstanding that its business reached a state of prosperity". Prior to the revision of the Taiwan Securities Law in 1988, subjective manipulation intentions were clearly specified, and the revised Securities Law deleted this provision, thereby making the determination of laundering more objective.

2. Objectively, the sale does not change the owner of the securities

In civil law, movable property is delivered on the basis of transfer, and real property is transferred on the basis of registration. The transfer of securities rights is generally based on the transfer of registration, but the ownership or owner mentioned here refers to substantial ownership or substantial ownership. The so-called substantive owner is a concept relative to the title owner. It means that although the securities are not held in their own name, the equity purchased with their own funds is under their control and enjoys or bears the People who have a surplus or loss of securities. For example, securities owned in the name of a spouse or minor child are usually considered to be the substantial owners of the other spouse or their parents. It may be transferred between the account of the actor or the account provider, but in fact it is still controlled and controlled by the actor. In this case, it is only the transfer of the nominal ownership or the change of the nominal owner. It is not a transfer of substantive ownership. Securities trading.

China's "Securities Law", "Interim Regulations on the Administration of the Issuance and Transaction of Stocks" and the "Interim Measures for the Prohibition of Securities Fraud" all explicitly prohibit laundering. Paragraph 3 of Article 71 of the Securities Law stipulates that anyone is prohibited from engaging in self-buying and selling without transferring ownership, which affects the price or volume of securities transactions to obtain improper benefits or pass on risks. the behavior of. Article 74 (1) (4) of the "Interim Regulations on the Administration of the Issuance and Transaction of Stocks" stipulates that "for the purpose of producing false prices of stocks in collusion with others, without transferring ownership or actual control of the stocks, buying and selling falsely" Paragraph 3 of Article 8 of the Interim Measures stipulates that for the purpose of manufacturing false prices of securities, collusion with others, false buying and selling without transferring ownership of the securities is a manipulation of the market and should be prohibited.