We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Culture

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Does "Backing Away" Mean?

By Alex Newth
Updated: May 17, 2024
Views: 4,440
References
Share

When a person or company refuses to purchase a financial instrument, even if a deal is in place, it is called "backing away". This term does not apply if there is anything incorrect about the deal; the seller must be offering the correct financial instrument or the buyer has the right to refuse a deal. While backing away is not encouraged, there can be a variety of reasons for it, especially among brokers and dealers. The action violates many regulations, and the violator may be disciplined with punishment.

It is common for a buyer to contact a seller to express interest in buying some financial instrument. When a buyer is backing away, he is refusing to purchase the assets from the seller, even though a deal may have been created. This can occur with any instrument, whether stocks, bonds or any other assets.

If the seller is not adequately representing the deal between the two parties, such as increasing the price or selling fewer assets, then the buyer can undertake backing away without punishment. Sellers that do not accurately represent the deal may be susceptible to punishment or fines. When the seller correctly represents the deal by selling the correct number of assets at the agreed upon price, then the buyer cannot legitimately back away from the deal.

Any type of buyer can perform the act of backing away, but brokers or dealers typically do this more than other buyer types. A buyer may do this is because he or she does not have the money to buy the assets, or simply because he or she has lost interest in the deal. Other, more legitimate reasons include having a backing party that refuses to give the buyer the money for the purchase or the buyer feeling as if the investment may not yield adequate returns.

While a buyer may be able to get away with this a few times, backing away is a violation of many rules made to regulate financial dealings. If the buyer is lucky, he or she will receive a warning, though he also may be temporarily banned from buying activity. More severe punishments include fines and being permanently banned from buying activities. This ban typically only covers the domestic country or region in which the transaction is pertinent, because most agencies made to enforce the policy against backing away do not have any authority in other countries or regions.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Link to Sources

Editors' Picks

Discussion Comments
Share
https://www.wisegeek.net/what-does-backing-away-mean.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.