Global Ecology Corporation (GLEC)

[arbpro]

It is an act, sometimes illegal, of trade manipulation. It can cover several different scenarios.

The context in which I used it is where a small trade, 1000 shares or less, goes through with the only apparent purpose of changing the stock price. Penny stocks generally trade with a percentage gap between the bid and the ask. Painting the tape occurs when a trader puts through a small trade in order to close the share price at the ask (painting the tape to the high) or puts through a small trade at the bid (painting the tape to the low).

For example, lets say it is 3:50pm, EST, and the market is about to close. Lets say the bid is 1.1 cents and the ask is 1.3 cents. The last trade was at 1.3 cents, for 50,000 shares. There is a gap of 15% between the bid and the ask. If someone is looking to buy up shares the next day, he might sell 100 shares at the bid so that the closing price is 1.1 cents, hopefully setting the tone that he can buy at that level the next day and not have to buy at the higher 1.3 cents. He is painting the tape to the low.

The same thing could happen to the high, where someone might be looking to sell the next day and wants to close the price at the ask. He might also only want to see his portfolio of net worth increased over night. For example let's say the bid is 1.1 cents and the ask is 1.25. The last trade was 1.15 for 100,000 shares. Someone wants to see his brokerage account for the night and puts in a buy of 100 shares at 1.25. By doing this he has increased the value of the shares in his account by 8%.

It usually accomplishes little, except to mess up the charts for chartisits.