Glossary of Municipal Securities Terms

ADJUSTED TRADE

An offsetting pair of transactions, executed in violation of the SEC’s anti-fraud rules and the MSRB’s pricing rules, in which a municipal securities dealer purchases a security above or below the prevailing market price while executing an offsetting trade to reflect a gain or loss on the sale of those securities at a price not at market, and the contra-party purchases a different security from the municipal securities dealer at an adjusted price that exceeds the security’s market value by approximately the same amount. These trades would permit a party to the transaction to liquidate portfolio holdings without accurately reflecting profits or losses.

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