SIE practice questionmediumFront-Running
A broker-dealer receives a large customer order and trades for the firm’s account ahead of executing the customer’s trade. This is prohibited as:
- AFreeriding
- BChurning
- CBreakpoint selling
- DFront-running✓ Correct answer
Explanation
Why D — Front-running
Front-running is trading ahead of a customer order. Churning is excessive trading, breakpoint selling is improper mutual fund sales, and freeriding avoids payment for trades.
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