Prearranged Trades
Categories: Trading, Mutual Funds, Trusts and Estates
In a legal trade, a customer buys or sells a security at the market price.
In a prearranged trade, two brokers meet over chai lattes for breakfast and decide to buy and sell a security at a specific price. When the market opens, they don't have to worry about market prices.
Yeah, it's illegal. Why? Because it gives them an advantage over other folks, who have to deal with market prices and changes in prices.