Last Updated: Jun 7, 2019

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A form of check fraud whereby a check may be drawn against uncollected or insufficient funds with the intention of creating a false balance in the account by taking advantage of the time laps required for collection. Kiting also occurs when a securities firms fails to deliver securities of buy and sell transactions in a timely manner. 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.