Prohibited Activities: Rapid Fire
Chapters in this video
- 0:00 The SEC antifraud rule: broad but not limitless
- 1:42 Painting the tape: faking genuine investor interest
- 2:18 Front running versus insider trading: customer order versus corporate secret
- 3:08 MNPI, tipper liability, and the should-have-known test
- 4:07 OBA versus selling away: follow the money
- 4:57 Penalty phase: 5 / 25 / 20 / 3x memory aid
- 6:31 Specified adults, trusted contacts, and hold timelines
- 7:57 Backing away applies only to market makers
- 8:27 Rapid-fire exam recap
What this video covers
- Why the SEC antifraud rule is the regulator's broad catch-all for both market manipulation and insider trading, and when silence alone is NOT a violation
- How to distinguish painting the tape, pump and dump, wash trading, marking the close, and churning from one another
- Why front running targets a pending customer order while insider trading requires material nonpublic information (MNPI) from a corporate source, and why confusing them is a massive exam trap
- The MNPI two-part test (material plus nonpublic), tipper liability even without trading, and why the objective should-have-known test defeats claims of naivety
- The difference between an outside business activity (OBA) and a private securities transaction (selling away), and why compensation triggers firm approval and supervision requirements
- The penalty memory aid: $5 million individual criminal fine, $25 million entity criminal fine, 20 years maximum prison, and 3x civil treble damages calculated after disgorgement
- Who qualifies as a specified adult, the trusted contact person's limited role, and the temporary hold timeline (15, 25, then 55 business days maximum)
Read the full lesson, free
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