SIE practice questionmediumMarket Manipulation - Front-Running
A broker learns that a client is about to place a large order that will likely affect a stock’s price. If the broker trades ahead of the client’s order for their own benefit, this is called:
- AFront-running✓ Correct answer
- BChurning
- CWash trading
- DMatched orders
Explanation
Why A — Front-running
Front-running is the prohibited practice where a firm or rep trades for their account with prior knowledge of a client’s large impending order. Churning is excessive trading for commissions, wash trades and matched orders are other manipulative actions.
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