SIE practice questionmediumMarket Manipulation
A firm encourages clients to purchase a bond it holds in inventory and simultaneously posts misleadingly positive reviews online about the bond. This combination of actions is:
- AAcceptable if reviews are 'puffery'
- BPermitted as long as the inventory is disclosed
- COnly a violation if the bond is municipal
- DMarket manipulation and misrepresentation✓ Correct answer
Explanation
Why D — Market manipulation and misrepresentation
Spreading false or misleading information to manipulate prices is illegal, regardless of disclosure or bond type. Puffery does not protect from fraud charges when statements are knowingly misleading.
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