SIE practice questionhardMarket Manipulation
A group of traders coordinate a series of matched orders to artificially inflate the trading volume and price of a small-cap stock before company news. This could lead to:
- AA temporary suspension of trading only
- BSEC enforcement actions and potential criminal charges✓ Correct answer
- CPermissible if disclosed in filings
- DOnly civil, not criminal, liability
Explanation
Why B — SEC enforcement actions and potential criminal charges
Matched orders to inflate price and volume constitute illegal market manipulation, subject to both civil and criminal penalties. Disclosure or trading suspension does not mitigate the violation.
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