Ignorer la navigation
The ETF Tax Dodge Is Wall Street’s ‘Dirty Little Secret’
Article

The ETF Tax Dodge Is Wall Street’s ‘Dirty Little Secret’

Banks are pumping billions of dollars into and out of funds with “heartbeat” trades.


résumé audio créé automatiquement
résumé audio créé automatiquement

Editorial Rating

8

Qualities

  • Analytical
  • Innovative
  • Eye Opening

Recommendation

One day, a trader injects billions of dollars into a technology fund. Just a few days later, that same trader suddenly withdraws all the money. What looks like the impulsive, erratic behavior of some off-the-rails investor is really a sophisticated tax dodge. Based on a 1969 tax law, this little-known maneuver, called a “heartbeat trade,” is legal in the United States, but some regard it as a scam. Eye-opening reporting from journalists Zachary R. Mider, Rachel Evans, Carolina Wilson and Christopher Cannon uncovers the way brokers, bankers and investors can legally game the system and avoid paying taxes.

Take-Aways

  • “Heartbeat” trades are a way to avoid paying taxes on some investment profits.
  • They are based on a tax law passed by the US Congress in 1969.
  • Exchange-traded funds (ETFs) use heartbeat trades.

About the Authors

Zachary R. Mider, Rachel Evans, Carolina Wilson and Christopher Cannon are reporters for Bloomberg News.