SIE practice questionmediumChurning
A registered representative executes frequent trades in a client’s account that are inconsistent with the client’s investment objectives. This is called:
- AChurning and is a prohibited practice✓ Correct answer
- BPortfolio rebalancing
- CAuthorized active management
- DAllowed under Regulation A+
Explanation
Why A — Churning and is a prohibited practice
Churning is making trades to generate commissions, not align with client goals. Rebalancing and active management must be consistent with objectives; Reg A+ is an offering exemption, not a trading rule.
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