Canadian Securities Course (CSC) Practice Exam · Question
An investment advisor learns confidential, material information about a public company before it is publicly announced. If the advisor then acts on this information to trade in the company's securities, what regulatory violation has occurred?
Insider trading occurs when an individual trades securities of a public company based on material non-public information about that company. This is illegal as
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Question: An investment advisor learns confidential, material information about a public company before it is publicly announced. If the advisor then acts on this information to trade in the company's securities, what regulatory violation has occurred?
Answer options: ✅ Insider trading
- Front-running
- Market manipulation
- Churning
Correct answer: Insider trading
Explanation: Insider trading occurs when an individual trades securities of a public company based on material non-public information about that company. This is illegal as it gives the insider an unfair advantage.
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