SIE practice questionmediumChurning
Which best describes 'churning' in a brokerage account?
- ASelling underperforming stocks
- BTrading based on material nonpublic information
- CFailing to diversify investments
- DExcessive trading to generate commissions✓ Correct answer
Explanation
Why D — Excessive trading to generate commissions
Churning is excessive trading in a client's account to generate commissions, violating suitability and ethical standards. Trading on nonpublic information is insider trading, not churning.
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.
Related Prohibited Activities & Ethics questions
- A registered representative trades a stock based on nonpublic information about a company's upcoming merger. This…
- A broker uses material, nonpublic information to trade a security. This is known as:
- Which scenario best describes market manipulation?
- A broker-dealer acting as principal charges a customer a 12% markup on a stock trade. Under FINRA's markup policy, this…