SIE practice questionmediumInsider Trading
A broker learns material, non-public information about an issuer through a client and executes trades for both the firm and the client based on this information. What violation has occurred?
- AFree-riding
- BChurning
- CInsider trading✓ Correct answer
- DBest execution
Explanation
Why C — Insider trading
Trading on material, non-public information is insider trading. Churning is excessive trading for commissions. Free-riding relates to buying and selling before payment. Best execution refers to seeking best prices.
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