Parking Violation

Parking Violation

The illegal practice of an acquiring company concealing ownership of the target company by holding stock under a related third party before attempting corporate takeover.

Notes:

Unlike the parking violations that many of us as drivers commit inadvertently, this type of violation is deliberately hostile. By having a third party hold significant portions of stock, the acquiring company can prepare for a takeover without exceeding certain ownership reporting levels and alerting the target company.

See also: Hostile Takeover, Parking, Takeover, Target Firm

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Parking violation

Often used in risk arbitrage. Illegal holding of stock by a third party, or the financing of such a stock, in which the third party's sole reason for holding the stock is to conceal ownership or control of a raider, thus sidestepping the Williams Act requirements of 5% holding limits. See: Rule 13d.