SIE Exam Question 954: Answer and Explanation

Question: 954

Which of the following is the prohibited practice of entering into an equity trade to capitalize on advance, nonpublic knowledge of a large pending transaction that will influence the price of the underlying security?

• A. Capping
• B. Front running
• C. Painting the tape
• D. Pegging

Correct Answer: B

Explanation:

Front running is the prohibited practice of entering into an equity trade to capitalize on advance, nonpublic knowledge of a large pending transaction that will influence the price of the underlying security.