SIE practice questioneasyInsider Trading
An employee at a public company buys shares based on confidential earnings information not yet released to the public. This is an example of:
- AChurning
- BBest execution
- CFront-running
- DIllegal insider trading✓ Correct answer
Explanation
Why D — Illegal insider trading
Trading on material nonpublic information is illegal insider trading. Best execution relates to trade quality, front-running is trading ahead of client orders, and churning is excessive trading for commissions.
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 Prohibited Activities & Ethics questions
- A registered representative learns a large institutional client will place a substantial buy order. The representative…
- A non-employee receives material, nonpublic information from an insider and trades on it. Under the law:
- An investor sells 100 shares of XYZ at a loss and purchases 100 shares of XYZ 20 days later. Under the wash sale rule,…
- Which of the following is considered market manipulation?
- Trading securities based on material, non-public information is known as:
- Front-running is best described as:
- Under the Insider Trading Sanctions Act, the SEC can seek civil penalties of up to how many times the profit gained or…
- A company executive learns nonpublic, material information about a pending merger and trades shares. This is a…