A compliance officer at a securities firm is reviewing account activity for potential regulatory violations involving market manipulation. Which of the following trading practices represent prohibited market manipulation under securities laws and FINRA rules? (Select ALL that apply.)
- Entering non-bona fide orders for a security with the intention of canceling them prior to execution to create a false impression of market interest.Cevap
- Executing offsetting buy and sell orders in a security with no actual change in beneficial ownership to artificially inflate trading volume.Cevap
- CExecuting an equity order on behalf of a retail customer as an agent and charging a disclosed commission.
- DInitiating criminal court proceedings and filing criminal fraud charges directly against non-member individuals independently of the SEC.
Cevap
The prohibited practices are entering non-bona fide orders with intent to cancel them prior to execution (spoofing) and executing offsetting transactions with no change in beneficial ownership (wash trading).
Entering non-bona fide orders with the intent to cancel before execution (spoofing) and trading with no change in beneficial ownership (wash trading) are illegal market manipulation tactics intended to generate false signals regarding supply, demand, and volume.
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Prohibited Market Manipulation and Fraudulent Practices