SIE practice questioneasyInsider Trading
Anna, an employee at a public company, shares confidential financial results with her friend before they are announced. Her friend then buys shares of the company based on this information. This scenario illustrates which prohibited activity?
- AFront-running
- BChurning
- CInsider trading✓ Correct answer
- DBreakpoint selling
Explanation
Why C — Insider trading
This is classic insider trading, which involves trading based on material, non-public information. Churning involves excessive trading in an account for commissions, front-running is trading ahead of a client order, and breakpoint selling relates to mutual funds. Only answer A addresses the misuse of non-public information.
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