Trading, Accounts & Prohibited ActsQuestion 255 of 398
A group spreads false, glowing rumors about a thinly traded stock they own to drive up the price, then sells their shares into the buying frenzy, leaving new buyers with losses. This scheme is called:
a.Front-running
b.Churning
c.Selling away
d.A pump-and-dump
Explanation
A pump-and-dump artificially inflates a security's price through false or misleading positive statements, then the promoters 'dump' their shares at the inflated price. It is a form of market manipulation prohibited under the antifraud provisions of the securities laws.
Law Reference: Securities Exchange Act of 1934Practice all 398 questions free — no signup required.
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