This is a glossary of terms that are, for the most part, unique to the world of financial investigations, or terms that have a different meaning than that which is commonly understood when they are used in this context.

Waiting Period: The Securities and Exchange Commission (SEC) requires a twenty day time period between a corporation's filing of its security offering registration and when its security may be legally sold to investors. If additional time is required to make corrections or append information to the registration statement and prospectus, the waiting period--also called "cooling off period"--may be prolonged.

Wallflower: A security that is no longer preferred by investors. Wallflower securities are apt to have low price/earnings ratios.

Wall Street: 1) Term used when referring to the investment community as a whole--also referred to as "the Street". 2) Popular name for New York City's financial district, where the New York and American Stock Exchanges and a multitude of brokerage firms are headquartered.

Warrant: A certificate that gives a shareholder the right to purchase a security at a specified price within a predetermined time period or perpetually. Corporations issue warrants directly and is sometimes offered along with a security as incentive to buy. The abbreviation "WT" is used in newspaper stock listings.

Wash Sale: 1) A security that is bought or sold, either concurrently or within a short period of time, to create artificial market activity to profit from a rise in the security's price. 2) The sale of a security and then the repurchase of shares within 30 days. The Internal Revenue Service (IRS) automatically disallows any losses for tax purposes. The IRS also extends the wash sale prohibition to closing short sales.

Wasting Asset: 1) Securities with a value that expires at a specified time in the future. The time values of the securities deteriorate as their termination date approaches. Examples of wasting assets are option contracts, warrants and rights. 2) Fixed assets that have a limited life. Thus, they are subject to depreciation. 3) Natural resources that diminish in value as the assets are depleted and therefore are subject to amortization. Examples are oil and gas extractions.

Watch List: List of securities under surveillance by either a brokerage firm, exchange or other self-regulatory organization. A security may be on a watch list for various business or regulatory reasons.

Watered Stock: Stock representing ownership of overvalued assets whose total worth is less than their invested capital. The condition of overcapitalized corporations may result from inflated accounting values, operating losses or excessive dividends. Some negative characteristics of watered stock are the inability to recoup full investment in liquidation, insufficient return on investment, low market value and the firm's reduced ability to capitalize on growth opportunities. The customary method of correcting the situation is for a corporation to either increase its assets without increasing its outstanding shares or reduce outstanding shares without reducing assets. Other methods do exist.

WD: Conditional transactions on the secondary distribution of shares issued and outstanding. An example is a wholly owned subsidiary. The abbreviation "WD" is used in newspaper stock listings.
Weak Market: Market typified by larger number of sellers then buyers along with a prevailing trend of declining prices.

Wedge: Technical chart pattern where two converging lines connect a series of peaks and troughs to form a wedge. These converging lines move in the same direction. Rising wedges normally occur when there are interruptions of a falling price trend. Falling wedges normally occur when there are interruptions of price rallies.

Western Account: A corporate underwriting agreement that syndicate members jointly sign with the issuer. However, each member's individual liability is limited to the specific number of shares or bonds that they individually underwrite--also called a "divided account."

W Formation: Technical chart pattern of a security's price that shows the price has hit a support level two times and is moving up--also called a "double bottom" formation. A double top is a reverse W-- the price has hit a resistance level and is headed downward.

When Distributed (WD): Conditional transactions on the secondary distribution of shares issued and outstanding. An example is a wholly owned subsidiary. The abbreviation "WD" is used in newspaper stock listings.

When Issued (WI): The abridged form of "When, as, and if issued" is a conditional transaction in a security authorized for issuance but has not been issued yet. The abbreviation "WI" is used in newspaper stock listings.

Whipsawed: In volatile price swings, the act of making losing trades as prices rise and fall. Traders are whipsawed if they buy just before prices fall and sell just before prices rise. Technicians also use this term to refer to misleading indicators in chart trends of a security or a market.

White Knight: A friendly acquirer who is sought by the target corporation of an unfriendly takeover.

White's Rating: Short for "White's Tax-Exempt Bond Rating Service", it classifies municipal securities based upon market conditions (not credit considerations) to determine appropriate yields.

Whole Life Insurance: Form of life insurance policy that protects the insured's beneficiary(s) in case the insured passes away. Unless the policy lapses or is canceled, it will remain in effect for the insured's lifetime. The policyholder pays a set yearly premium that does not increase as the person ages. The cash value portion of the policy accumulates tax-deferred, and may be borrowed against in a device called a policy loan. If the loan is not repaid, the death benefit is decreased by the loan amount. Whole life insurance is also known as "permanent" life or "straight" life insurance.

Wholesaler: 1) Broker-dealer that trades with other broker-dealers instead of retail investors. 2) An investment banker who performs as an underwriter in a new issue or as a distributor in a security's secondary offering. 3) A mutual fund sponsor.

WI (When Issued): The abridged form of "When, as, and if issued" is a conditional transaction in a security authorized for issuance but has not been issued yet. The abbreviation "WI" is used in newspaper stock listings.

Wide Opening: At the trading session's opening, an unusually large spread exists between a security's bid and asked prices.

Widow-And-Orphan Stock: A very safe stock that pays high dividends. The company usually has a noncyclical business and frequently has a low beta coefficient.

Wire House: National or international brokerage firms whose branch offices are linked by communication networks. The term dates back to when only the largest firms had high speed communications. The networks rapidly disperse information and research about securities and markets. Through increased technology, regional brokers and small retail firms now have the same ability. However, the designation as a wire house is used only to refer to the largest brokerage firms.

Withdrawal Plan: Open-end mutual fund program in which shareholders can receive fixed payments of income and/or capital gains on a monthly or quarterly basis.

Withheld Orders: A sales violation that occurs when a broker fails to promptly enter a client's mutual fund order.

Withholding: Action by a broker-dealer whereby an allotment of securities in a public offering is retained for its own purposes. If the offering is a hot issue, this action may be a violation of the Rules of Fair Practice of the National Association of Securities Dealers (NASD).

Withholding Tax (W/Tax): The Internal Revenue Service (IRS) requires financial institutions to report all client's social security numbers, interest and dividend payments and sale proceeds. This practice applies to all US citizens and resident aliens. Those clients who have not furnished a W-9 or W-8 form to the institution are subject to withholding tax--also known as "backup withholding".

With Warrants (WW): A security that trades with warrants as apart of the issue. The abbreviation "WW" is used in newspaper stock listings.

Working Capital: A financial calculation that is equal to a corporation's current assets minus its current liabilities. Working capital finances a business's cash conversion cycle--period needed to convert raw materials into finished goods, finished goods into sales, and accounts receivable into cash. Sources of working capital include retained earnings, short-term loans and trade credit.

Working Control: Effective control of a corporation exerted through ownership, whether individually or by a group acting in concert, of less than 51% voting interest.

Workout Market: A price range where a broker-dealer feels that a buy or sell may be transacted. For example, a client wishes to sell a block of stock and asks the broker-dealer to estimate the sale price. The broker-dealer's reply would be, "It is 30 to 32, workout." The estimation is that the block can be sold somewhere between $30 and $32 per share.

World Bank: Formed to be the bank lender and technical advisor to the developing countries, utilizing funds and technical resources from the member nations.

Write-Off: The act of charging an asset amount to expense or loss to reduce or eliminate the value of the asset, which reduces profits. Write-offs are taken in accordance with allowable tax depreciation of a fixed asset, and with the amortization of certain other assets.

Writer: Sellers of option contracts who obligate themselves to the performance agreed upon in the contract: to sell (if a call was written) or to buy (if a put was written) the underlying security at the predetermined price by a specific date if the option is exercised. In return for the sellers' obligation, they collect a premium.

Writing Naked: Strategy used by Option sellers (writers) in which they do not own the underlying security. This strategy can lead to profits if the stock moves in the anticipated direction. However, large losses can be incurred if the stock moves in the opposite direction. The writer will have to go into the open market to purchase the stock to effect delivery to the option buyer.

Writing Puts To Acquire Stock: An option writer, who believes a stock's price is going to decline, will write a put option exercisable at the price in which the purchase of the stock represents a good investment. If the stock goes down and the option is exercised, the writer has bought the stock at the price that was decided represents a good investment. In addition, the writer has the premium income. If the stock goes up, the option will not be exercised and the writer is ahead by the premium amount received.

WT (Warrant): A certificate that gives a shareholder the right to purchase a security at a specified price within a predetermined time period or perpetually. Warrants are issued by corporations directly and are sometimes offered along with a security as incentive to buy. The abbreviation "WT" is used in newspaper stock listings.

W/Tax (Withholding Tax): The Internal Revenue Service (IRS) requires financial institutions to report all client's social security numbers, interest and dividend payments and sale proceeds. This practice applies to all US citizens and resident aliens. Those clients who have not furnished a W-9 or W-8 form to the institution are subject to withholding tax--also known as "backup withholding".

WW (With Warrants): A security that trades with warrants as a part of the issue. The abbreviation "WW" is used in newspaper stock listings.

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