SIE Exam Question 633: Answer and Explanation

Question: 633

Which of the following describes the illegal practice of excessive buying and selling of securities in a customer's account without considering the customer's investment goals? Its primary goal is to generate commissions that benefit the broker.

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

Correct Answer: B

Explanation:

Churning describes the illegal practice of excessive buying and selling of securities in a customer's account without considering the customer's investment goals. Its primary goal is to generate commissions that benefit the broker.