Question #20
Reading: Reading 42.2 Standards of Professional Conduct Guidance for Standards II
PDF File: Reading 42.2 Standards of Professional Conduct Guidance for Standards II.pdf
Page: 12
Status: Correct
Correct Answer: A
Question
Mark Williamson is "bearish" on ABC Manufacturing Company. Williamson is so convinced that ABC is overpriced, two weeks ago, he shorted 100,000 shares. Today, Williamson is "surfing" several popular investment bulletin boards on the internet and posting false derogatory comments about company management. According to Standard II(B), Market Manipulation, Williamson has engaged in:
Answer Choices:
A. transaction-based manipulation, but not information-based manipulation
B. both transaction-based manipulation and information-based manipulation
C. information-based manipulation, but not transaction-based manipulation
Explanation
Williamson is in violation of Standard II(B), Market Manipulation, by engaging in
information-based manipulation. Information-based manipulation includes, but is not
limited to, spreading false rumors about a firm in order to induce others to trade.
(Module 42.3, LOS 42: II(B))