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: Anna tipped material, non-public information to her friend, and the friend traded on it. Churning involves excessive trading for commissions, front-running is trading ahead of a customer order, and breakpoint selling relates to mutual fund sales charges.
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