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.
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