CORNER
For surveying purposes, the designation given to a
particular location formed by the intersection of
two boundary lines of real property.
The process by which a group of investors or
dealers in a particular commodity exploit its market
by purchasing it in large quantities and removing
it from general sale for a time, thereby
dramatically increasing its market price because
its limited supply is greatly exceeded by the
demand for it. The condition created when a commitment
is made to sell at a special time of delivery
in the future, a much greater quantity of a
commodity than is available in the present market.
This type of commitment is known as a
futures contract. Frequently, neither buyer nor
seller expects actual delivery of the goods. They
are solely speculating on the difference between
the contract price and market price on a particular
date. The market price is affected by various
economic factors.When a corner is created, the
demand for the commodity far exceeds its supply,
thereby driving up market prices. On the
date of delivery, therefore, the market price will
exceed the contract price if no additional quantities
can be delivered by persons other than the
seller who has “cornered” the market. The buyer
must then pay the seller, who had a corner on
the specified commodity, the amount by which
the market price exceeds the contract price. If,
however, additional quantities of the commodity
are available in the market, the seller incurs
financial losses because the market price will be
less than the contract price at which the market
was “cornered.”
The COMMODITY FUTURES TRADING COMMISSION
is the federal regulatory agency charged
with the administration of the Commodity
Exchange Act (7 U.S.C.A. § 1 et seq.), which is
designed to protect all commodity investors
from manipulative practices that hinder the free
flow of commerce. Anyone who deliberately
exploits the commodities market to create a corner
may be prosecuted under federal law for
commission of a felony, punishable by a fine of
not more than $500,000 or imprisonment of not
more than five years, or both, plus the costs of
prosecution.
