A compliance department at a broker-dealer is reviewing trade executions and order flow within a client's trading account. The audit identifies two distinct trading patterns:
1. The account frequently enters large buy limit orders well below the prevailing bid price without intending to execute them, attracting other market participants to raise their bids, and then immediately cancels the buy orders once the account's separate sell orders are executed at the higher price.
2. The account simultaneously places buy and sell orders for identical share quantities in a thinly traded equity security across two accounts owned by the same individual, resulting in no change in beneficial ownership.
Based on SEC regulations and FINRA rules regarding market manipulation, which of the following statements regarding these activities are CORRECT? (Select all that apply.)
- The pattern of entering non-bona fide orders to artificially move market prices and then canceling them prior to execution constitutes prohibited spoofing.Cevap
- Executing offsetting transactions that result in no actual change in beneficial ownership constitutes prohibited wash trading.Cevap
- CExecuting matching buy and sell orders across accounts under common control is categorized as spoofing rather than wash trading if the trade increases overall transaction volume.
- DIf FINRA confirms these market manipulation violations, it has sole jurisdiction to independently initiate criminal prosecution and file federal criminal charges against the account holder.