SIE practice questionhardInsider Trading - Chinese Walls
An investment bank’s research department obtains non-public information about a merger from its advisory department. If the information is shared and acted upon, which compliance protocol was breached?
- AShort position reporting
- BChinese wall procedures to prevent insider trading✓ Correct answer
- CCustomer privacy under Regulation S-P
- DTrade matching requirements
Explanation
Why B — Chinese wall procedures to prevent insider trading
Chinese wall (or information barrier) procedures are designed to prevent misuse of inside information within firms. Sharing and trading on such information is a serious breach. Short reporting, privacy, and trade matching are unrelated.
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 overhears material, nonpublic information about a company from a client and subsequently…
- A trader places large orders with no intent to execute, hoping to move the price and then cancels them. This prohibited…
- Which of the following is an example of market manipulation?
- A corporate 'tipper' reveals material inside information to a relative, who profits by trading before the news is…
- Which of the following is NOT considered inside information?
- Just before market close, a trader enters a series of buy orders solely to boost the closing price of a stock and…
- A group of traders coordinate to buy large volumes of a thinly traded stock to artificially raise the price and attract…
- A high-frequency trading firm floods the market with numerous orders it intends to cancel immediately, aiming to slow…