Round Trip Trading

This is practice where a firm trades an asset and then buys it back many times to inflate its transaction volume. However, the market-manipulation has no impact on profit (although it will bolster top line results).

Dynegy was forced to pay the SEC $3 million after it was found conducting round trip trades with special purpose entities. According to the SEC, Dynegy’s “overstatement of its energy-trading activity resulting from ’round-trip’ or ‘wash’ trades — simultaneous, pre-arranged buy-sell trades of energy with the same counter-party, at the same price and volume, and over the same term, resulting in neither profit nor loss to either transacting party.”