Kiting

1. The act of misrepresenting the value of a financial instrument for the purpose of extending credit obligations or increasing financial leverage.

2. A fraudulent act involving the alteration or issuance of a check or draft with insufficient funds.

1. Kiting generally occurs when securities firms fail to deliver securities of buy and sell transactions in a timely manner (before the three-day settlement period). The firm failing to receive the securities is required to purchase the shortage on the open market and charge the delinquent firm any associated fees. The delinquent firm is practicing the fraudulent act of kiting if it fails to purchase the securities on the open market and maintains a short position, delays delivery or takes part in transactions contrary to SEC regulations regarding the proper settlement of trades.

2. In the past, clearing checks between banks took extended periods of time. Individuals used to take advantage of this delay and wrote "bad" checks to deposit funds before the checks were cashed. Banks have tried to cut down on kited checks by placing holds on deposited funds and charging for returned checks.

Both of these kiting practices are considered illegal.


Investment dictionary. . 2012.

Look at other dictionaries:

  • kiting — kit·ing / kī tiŋ/ n: check kiting Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. kiting …   Law dictionary

  • Kiting — can refer to: * In sports, a common slang term for kite flying or sometimes refers to Kitesurfing. * In investing, a form of check fraud called check kiting. * In MMORPGs, a tactical move using long range attacks, see: Kiting (MMORPG term). *… …   Wikipedia

  • Kiting — Drachen in Sternform Flugbär gut zu erkennen: die Drachenschnur Ein Drachen (nach chinesischen, als Drachenbilder ausgeführten D …   Deutsch Wikipedia

  • kiting — Used in banking to refer to the practice of depositing and drawing checks at two or more banks and taking advantage of the time it takes for the second bank to collect funds from the first bank. Bloomberg Financial Dictionary Also refers to… …   Financial and business terms

  • kiting — Kiteflying Kite fly ing, n. A mode of raising money, or sustaining one s credit, by the use of paper which is merely nominal; called also {kiting} …   The Collaborative International Dictionary of English

  • kiting — 1. The practice of writing checks from one bank account and depositing them in another, in order to temporarily inflate an organization’s *cash holdings. Kiting is a *fraudulent use of the time taken by checks to clear through a banking system. 2 …   Auditor's dictionary

  • kiting — The wrongful practice of taking advantage of the float, the time that elapses between the deposit of a check in one bank and its collection at another. Method of drawing checks by which the drawer uses funds which are not his by drawing checks… …   Black's law dictionary

  • kiting — /kuy ting/, n. 1. kiteflying. 2. See hang gliding. [1860 65; KITE1 + ING1] * * * kitˈing noun Kite flying • • • Main Entry: ↑kite * * * kiting see kite …   Useful english dictionary

  • kiting — using the body depth and erect fins to guide the fish across a current. Also used by a fish when hooked …   Dictionary of ichthyology

  • kiting — /kuy ting/, n. 1. kiteflying. 2. See hang gliding. [1860 65; KITE1 + ING1] * * * …   Universalium

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