SIE practice questioneasyInsider Trading
A registered representative overhears material, nonpublic information about a company from a client and subsequently buys shares for their own account. What rule has the representative violated?
- ARegulation D private placement rules
- BInsider trading prohibitions under the Securities Exchange Act of 1934✓ Correct answer
- CThe Investment Company Act of 1940
- DRegulation S foreign transaction rules
Explanation
Why B — Insider trading prohibitions under the Securities Exchange Act of 1934
Using material, nonpublic information for trading is insider trading, prohibited by the Securities Exchange Act of 1934. Regulation D and S concern securities sales exemptions, while the Investment Company Act applies to pooled investment vehicles.
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