SIE Exam Question 339: Answer and Explanation

Question: 339

Which of the following terms describes a broker-dealer's practice of interjecting another broker-dealer into the middle of a trade, resulting in an increase in commission at the customer's expense?

• A. Churning
• B. Front-running
• C. Collaboration
• D. Interpositioning

Correct Answer: D

Explanation:

D - FINRA rules prohibits broker-dealers from interpositioning a third party between the customer and broker for purposes of avoiding or evading the best execution requirement, or to generate additional fees and commissions.