Tailgating

Tailgating

Purchase of a security by a broker after the broker places an order for the same security for a customer. The broker hopes to profit either because of information which the customer has or because the customer's purchase is of sufficient size to affect security prices. This is an unethical practice.

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tailgating

The placement of an order by a registered representative for the registered representative's own account on the basis of an order that has been received from a client. Suppose a customer calls a registered representative with an order to sell 1,000 shares of stock. If the representative sells the stock for the customer and follows it by selling additional shares of the same stock for his or her own personal account, the representative is tailgating.

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Tailgating. When a broker places your order for a security, and then immediately places an order for his or her own account for the same security, the broker is tailgating.

Although this practice, which is also known as piggybacking, isn't illegal, it is considered unethical, because the assumption is that the broker is trying to profit from information the broker believes you have about the stock.

A broker will typically tailgate only when you buy stock in a sufficient quantity to potentially affect the price of the security.