SIE practice questioneasyMarket Manipulation
Painting the tape refers to which prohibited market activity?
- ATrading on inside information.
- BCreating the illusion of active trading by repeatedly buying and selling a security among related parties.✓ Correct answer
- CSelling unregistered securities.
- DAllowing non-public information to reach the public.
Explanation
Why B — Creating the illusion of active trading by repeatedly buying and selling a security among related parties.
Painting the tape occurs when parties trade securities back and forth to create the false appearance of active trading. Insider trading and selling unregistered securities are illegal but are different violations, and releasing public information is not a manipulation tactic by itself.
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