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

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.