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Zorluk: OrtaProhibited Market Manipulation and Fraudulent Practices

An investor simultaneously places offsetting buy and sell orders for 10,000 shares of a thinly traded stock across two separate brokerage accounts under common ownership, resulting in no actual change in beneficial ownership but creating a false impression of market activity. Which of the following best identifies this prohibited trading practice?

  1. Wash tradingCevap
  2. B
    Spoofing
  3. C
    Acting as a principal dealer
  4. D
    Permissible liquidity provision sanctioned by FINRA criminal rules

Cevap

The prohibited activity is wash trading, which involves executing transactions where there is no effective change in beneficial ownership to falsely inflate volume or activity.
Wash trading is a fraudulent manipulation strategy in which an investor buys and sells the same security simultaneously without changing beneficial ownership, designed to deceive the public by giving a false impression of trading interest or volume.

Adım Adım Çözüm

1
Analyze the customer trading behavior described in the scenario.
The investor is placing matched buy and sell orders resulting in trade executions with no change in beneficial ownership.
Determining beneficial ownership status distinguishes legitimate trading from market manipulation schemes.
2
Identify the specific regulatory violation associated with creating artificial volume without changing ownership.
The action directly matches the definition of wash trading under FINRA and SEC anti-manipulation rules.
Wash trading is prohibited because it deceives other market participants regarding true trading interest and volume.

Anahtar Kavram

Wash Trading and Market Manipulation
Tahmini Süre:1m 0s
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Konular

Prohibited Market Manipulation and Fraudulent Practices