SIE Understanding Trading, Customer Accounts and Prohibited Activities Question 56: Answer and Explanation

Question: 56

Which of the following prevents persons involved with a securities offering from artificially influencing the price?

• A. IRS Code
• B. Regulation M
• C. Investment Company Act of 1940
• D. FINRA Rules

Correct Answer: B

Explanation:

B: Choice B is correct because Regulation M helps ensure the market price of a public offering is based on supply and demand, rather than persons involved in promoting the issue unfairly manipulating the market price artificially. Choices A, C, and D are incorrect because these do not prohibit persons involved with a public offering from manipulating the market price.