We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

In Finance, what is a Parking Violation?

Mary McMahon
Updated May 17, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A parking violation is an illegal tactic in which stocks are “parked,” so to speak, with a third party to conceal the identity of their owner. Parking violations can be prosecuted under the law if they are uncovered by investigators or regulators. Despite the risks, people sometimes engage in this activity because they feel that the potential benefits may outweigh the risks or they are confident that they can accomplish it in such a way that they will not be caught.

In a parking violation someone conceals his or her identity by having stocks held or financed by a third party. The third party is handling the stocks solely for the purpose of concealing identity, in contrast with perfectly legal situations in which stocks may be assigned to a third party. Surface investigation of the stocks would suggest that the third party is the controller. Thus, the company being traded would be unaware that a high percentage of its stock is actually concentrated in the hands of a single owner.

The reason people use the parking violation tactic is usually because they are planning a hostile takeover. By parking stocks with third parties, people can quietly buy up a controlling share of stock in a company without alerting the company to their activities. This is done to catch the company off guard so that a hostile takeover can be accomplished. Corporate raiders, people who specialize in executing hostile takeovers, may utilize a parking violation as a tactic in part of a larger plan.

In the United States, people who own more than five percent of a company's stock must file reportings with the Securities and Exchange Commission (SEC) under the Williams Act. This aspect of the Williams Act was passed in 1968 in response to a series of hostile takeovers. By requiring people to register, the Act was designed to ensure that companies could be made aware of potential takeover attempts so that they could take action, if desired.

Someone who holds more than five percent of a company's stock without reporting is in violation of the law. Reporting, however, would alert companies to the fact that someone was attempting to buy up a controlling share. Thus, people may utilize a parking violation to try and avoid the reporting requirement. If it is suspected that such a violation is occurring, this can be reported to regulators who will investigate the specifics of the situation and determine whether or not action needs to be taken.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGeek researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.