thinly traded security

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Thinly Traded Security

An inactive or infrequently traded bond or stock. Thinly traded securities are usually traded in small batches, approximately five shares at a time. Thinly traded securities are fairly illiquid and may be difficult to sell in a downturn. Their prices are also volatile because a small change in demand can greatly affect the price. Thinly traded securities are sometimes called cabinet securities because they are kept in cabinets on the trading floor until they are needed. See also: Cabinet crowd, Inactive post.

thinly traded security

A security that trades with little volume. Institutional investors usually exclude these securities from their portfolios because of the large price changes that would occur if trades of any significant size took place.
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According to court documents, Marimuthu was part of a conspiracy that operated out of Thailand and India from February 2006 through December 2006 in which the prices of thinly-traded securities were fraudulently inflated by hacking into brokerage accounts in the United States and then illegally using the accounts to make large, unauthorized purchases of securities in the name of the unsuspecting customers.
Barron Moore opened accounts for numerous customers who repeatedly deposited large numbers of unregistered shares of thinly-traded securities into those accounts, sold those securities and then wired the proceeds out of the accounts.
According to the indictment, Marimuthu was part of a conspiracy operated out of Thailand and India from February 2006 through December 2006 in which the prices of thinly-traded securities were fraudulently inflated by hacking into brokerage accounts in the United States and then illegally using the accounts to make large unauthorized purchases of securities in the name of unsuspecting customers.
The question of when to use fair value pricing is especially relevant to funds that hold foreign and thinly-traded securities because accurate market quotations for those types of securities may be more difficult to obtain due to different time zones and lack of current prices.