BROWSE

Tailgating

Definition

Tailgating is when a driver drives behind another vehicle while not leaving sufficient distance to stop without causing a collision if the vehicle in front stops suddenly.

What is 'Tailgating'

Tailgating is when a broker, financial advisor or other sort of investing agent buys or sells a security for a client, and then proceeds to make the same transaction for himself. While tailgating is not an illegal practice, it is frowned upon and considered unethical by professionals in the field.

Explaining 'Tailgating'

Tailgating is legal; however, it is also a highly unethical act. It is easily confused with two other investment-related actions, both of which are illegal. Investors and practitioners should be aware that, while it may appear similar, tailgating is not the same thing as the practice of insider trading. While insider trading occurs when the purchase or sale of a security arises from confidential, or proprietary, information, tailgating takes place when the broker takes a cue or trade request from the client with the client's own information, and then places the same trade for his own account based on the information the client provided.

Example of Tailgating

Tom is an investment advisor for his client, Bill. Bill contacts Tom and provides him with information that Company A is planning to announce a reorganization of its management structure, which includes bringing in new managers to improve overall performance. With this provided information from Bill, Tom agrees with Bill the new management will most likely succeed in improving Company A's performance, and therefore increase in profitable investments. After purchasing the 1,000 shares for Bill as he requested, Tom proceeds to purchase another 1,000 shares for himself.


Further Reading


Drinking games, tailgating, and pregaming: Precollege predictors of risky college drinking
www.tandfonline.com [PDF]
… Listen. Research Article. Drinking games, tailgating, and pregaming: Precollege predictors of risky college drinking. Kevin … Research Article. Drinking games, tailgating, and pregaming: Precollege predictors of risky college drinking …

Tailgating and pregaming by college students with alcohol offenses: Patterns of alcohol use and beliefsTailgating and pregaming by college students with alcohol offenses: Patterns of alcohol use and beliefs
www.tandfonline.com [PDF]
… Listen. Research Article. Drinking games, tailgating, and pregaming: Precollege predictors of risky college drinking. Kevin … Research Article. Drinking games, tailgating, and pregaming: Precollege predictors of risky college drinking …

The relationship among alcohol consumption, tailgating, and negative consequencesThe relationship among alcohol consumption, tailgating, and negative consequences
www.tandfonline.com [PDF]
… Listen. Research Article. Drinking games, tailgating, and pregaming: Precollege predictors of risky college drinking. Kevin … Research Article. Drinking games, tailgating, and pregaming: Precollege predictors of risky college drinking …

The culinary and nutritional aspects surrounding the newfound sport of tailgatingThe culinary and nutritional aspects surrounding the newfound sport of tailgating
www.tandfonline.com [PDF]
… Listen. Research Article. Drinking games, tailgating, and pregaming: Precollege predictors of risky college drinking. Kevin … Research Article. Drinking games, tailgating, and pregaming: Precollege predictors of risky college drinking …

Enduring involvement of tailgating college football fans: the influence of demographic factorsEnduring involvement of tailgating college football fans: the influence of demographic factors
go.gale.com [PDF]
… Listen. Research Article. Drinking games, tailgating, and pregaming: Precollege predictors of risky college drinking. Kevin … Research Article. Drinking games, tailgating, and pregaming: Precollege predictors of risky college drinking …



Q&A About Tailgating


How do you tell if someone has engaged in an unethical act?

You look at their behavior and see if they have done anything wrong according to professional standards set forth by organizations such as FINRA (Financial Industry Regulatory Authority).

Why would someone want to engage in an unethical practice like this one?

They may not realize that what they are doing is considered unethical because they have never been taught about ethical practices before entering into their profession.

How do you know if someone has engaged in this practice without your knowledge?

If you notice that your investments seem to perform better than expected after talking with your broker about them then you should contact FINRA immediately so they can investigate further

Is it legal to engage in tailgating?

Yes, it is legal to engage in tailgating.

What is tailgating?

Tailgating is when a broker, financial advisor or other sort of investing agent buys or sells a security for a client, and then proceeds to make the same transaction for himself.

What does it mean to be unethical?

It means that something is frowned upon by professionals.

Are there any illegal practices that can be confused with tailgating?

Yes, two other investment-related actions can be confused with tailgating; insider trading and front running. Insider trading occurs when the purchase or sale of a security arises from confidential information while front running takes place when the broker takes a cue or trade request from the client with the client's own information and then places the same trade for his own account based on the information provided by his client.

Who are investors who engage in tailgating?

Investors who engage in tailgating are brokers, financial advisors and other sorts of investing agents.

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