Piggyback

Piggybacking

The practice in which a broker conducts a transaction on his/her own account after filling a similar order on behalf of a client. For example, if a client sells 10,000 shares and the broker owns some shares in the same company, he may piggyback by selling his own shares. A broker piggybacks when he/she believes that the client has insider information, or at least a better understanding than the broker on the market's future movements. Piggybacking should not be confused with piggy back registration, which is a different concept altogether.

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piggyback

1. A broker trading in his or her personal account after trading in the same security for a customer. The broker may believe the customer has access to privileged information that will cause the transaction to be profitable.

2. See follow-on offering.

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Piggyback. A broker who piggybacks acts illegally by buying or selling a security for his or her own account after -- and presumably because -- a client has authorized that same transaction.

One speculation is that a broker in this situation thinks the client is acting on information that the broker doesn't have.