SIE practice questionmediumMarket Manipulation - Rumor Spreading
A registered representative spreads false rumors to clients to induce trading. This practice is:
- AMoney laundering
- BProhibited market manipulation✓ Correct answer
- CA requirement under Regulation D
- DAcceptable if rumors are positive
Explanation
Why B — Prohibited market manipulation
Spreading false rumors is a classic example of market manipulation and is strictly prohibited. Money laundering is a different criminal activity. Regulation D does not require rumor spreading, and intent does not justify the action.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Options questions
- A broker tells a client that an out-of-the-money option has significant intrinsic value to encourage a purchase. This…
- A registered representative sells out-of-the-money call options on a company after overhearing executives discuss a…
- A rep encourages a client to purchase uncovered options beyond the client’s stated risk tolerance and financial…
- A broker-dealer purchases shares of a stock in the open market and simultaneously recommends clients buy calls on the…
- Selling call options while possessing material, nonpublic information about the underlying security is considered:
- A representative recommends frequent buying and selling of options to generate commission revenue, regardless of client…
- A registered rep recommends an uncovered options strategy to a conservative investor without discussing risks. This is:
- If a put option is 'at the money,' what is its intrinsic value?