An agent receives a limit order from a client to buy 400 shares of LMN stock at $35. While waiting for the limit to be reached, the agent notices LMN briefly trades at $34.90 for a few minutes. The agent, seeing a personal opportunity, buys shares at $34.90 for their own account before entering the client’s order. Which prohibited trading practice does this scenario illustrate?

Why C — Matched orders

This is an example of front-running (B), which occurs when a registered representative executes a trade for their own account before entering a customer’s order, using knowledge of the order to benefit personally. (A) Churning involves excessive trading for commissions, not relevant here. (C) Matched orders involve coordinating trades to give the false impression of trading activity. (D) Breakpoint sales relate to mutual fund discounts, not equity orders.