What illegal practice involves placing a large number of orders just before trading opens or closes to influence stock prices?

What illegal practice involves placing a large number of orders just before trading opens or closes to influence stock prices?

• A. Market manipulation
• B. Front running
• C. Churning
• D. Prohibited trading

Answer: (A)

Market manipulation refers to the illegal practice of intentionally inflating or deflating the price of a security to create a misleading appearance of active trading, thereby influencing the stock price. This can be done through various techniques, such as placing a large number of orders just before the market opens or closes. The goal of such actions is to attract other investors by creating the false impression of a high demand or supply, leading them to make decisions based on manipulated information. This practice is considered unethical and illegal because it undermines the integrity of the market and can result in significant financial losses for unsuspecting investors. For these reasons, regulatory bodies closely monitor trading activities to detect and prevent market manipulation.

Market manipulation refers to the illegal practice of intentionally inflating or deflating the price of a security to create a misleading appearance of active trading, thereby influencing the stock price. This can be done through various techniques, such as placing a large number of orders just before the market opens or closes. The goal of such actions is to attract other investors by creating the false impression of a high demand or supply, leading them to make decisions based on manipulated information.

This practice is considered unethical and illegal because it undermines the integrity of the market and can result in significant financial losses for unsuspecting investors. For these reasons, regulatory bodies closely monitor trading activities to detect and prevent market manipulation.