A member firm's automated trade surveillance system flagged four separate trading activities across different account types. Match each scenario description with the specific prohibited market practice or regulatory violation it represents.
- Executing prearranged equity transactions between accounts under common beneficial ownership to generate artificial trading volume and give a false impression of market interest.Wash Trading
- Routing a customer order through an unnecessary third-party broker-dealer, adding an additional layer of commissions or markups without providing any price improvement.Interpositioning
- Failing to execute a trade at a published bid or offer price for the minimum specified order quantity when presented with a valid customer market order.Backing Away
- Purchasing shares in a cash account and subsequently selling those same shares to pay for the initial purchase prior to the settlement date without depositing cash.Freeriding
Cevap
Wash Trading pairs with executing transactions under common ownership to artificially inflate volume; Interpositioning pairs with introducing an unnecessary third-party broker; Backing Away pairs with failing to honor a published market quotation; Freeriding pairs with selling securities to fund their initial cash purchase prior to settlement.
Each trading scenario represents a distinct violation of securities rules: Wash Trading creates fake volume without beneficial ownership transfer; Interpositioning unlawfully inserts intermediary fees; Backing Away breaches firm quote rules; and Freeriding breaches Federal Reserve Regulation T credit rules.
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Anahtar Kavram
Prohibited Market Manipulation and Fraudulent Practices