SIE practice questioneasyInsider Trading
Trading securities based on material, non-public information is known as:
- AFront-running
- BChurning
- CInsider trading✓ Correct answer
- DFree-riding
Explanation
Why C — Insider trading
Insider trading is the illegal practice of buying or selling securities based on material, non-public information (MNPI). Material information is any information that a reasonable investor would consider important in making an investment decision. Non-public means it has not been broadly disseminated to the general public. Violations carry severe penalties including fines up to $5 million for individuals, imprisonment up to 20 years, and disgorgement of profits.
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