Trading Ahead Law and Legal Definition

Trading ahead occurs when a specialist trades on his own proprietary account ahead of and instead of matching existing buy and sell orders, thus securing an advantageous price for his own account. [United States v. Finnerty, 2006 U.S. Dist. LEXIS 72119 (S.D.N.Y. Oct. 2, 2006)].

The practice of trading ahead is not permitted by federal civil or criminal law. In the context of criminal prosecutions, the federal courts have held that trading ahead by a broker constitutes the crimes of mail fraud and wire fraud under federal law, since it violates a broker's fiduciary duty to his customers. [Roskind v. Morgan Stanley Dean Witter & Co., 80 Cal. App. 4th 345 (Cal. App. 1st Dist. 2000)].