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SIE practice questioneasyFront-Running

A broker learns that a customer is placing a large buy order, and buys shares for their own account just before entering the customer's order. This practice is called:

  1. AFreeriding
  2. BMatched orders
  3. CChurning
  4. DFront-running✓ Correct answer
Explanation

Why D — Front-running

Front-running occurs when a broker trades ahead of a customer’s order to take advantage of expected price movements. Matched orders (B) are manipulative trades. Churning (C) is excessive trading for commissions. Freeriding (D) is selling before paying.

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