Match each prohibited market practice with its correct regulatory description.
- CappingEntering sell orders for a security to prevent its market price from rising above a specific target level.
- PeggingEntering buy orders for a security to prevent its market price from falling below a specific target level.
- Marking the CloseExecuting transactions near the end of the trading day to artificially influence a security's reported closing price.
- Cornering the MarketAcquiring control of a sufficient amount of an asset's floating supply to dictate its market price.
Answer
Capping matches placing sell orders to prevent price increases above a threshold; Pegging matches placing buy orders to prevent price decreases below a threshold; Marking the Close matches executing trades near market close to manipulate reported settlement prices; Cornering the Market matches acquiring control over an asset's supply to dictate prices.
Each practice reflects a distinct manipulative trading mechanism prohibited under securities regulations. Capping uses sell orders to suppress price growth above a target. Pegging uses buy orders to support price levels above a floor. Marking the Close relies on execution timing right before market close to alter closing price data. Cornering the Market relies on supply control to force price inflation.
Step-by-Step Solution
Key Concept
Forms of Prohibited Market Manipulation under FINRA and SEC Rules