SIE Prohibited Activities
Updated October 27, 2026
The SIE expects you to recognize the activities that break securities rules. Most questions describe a situation and ask which violation it is. Here are the ones to know, followed by free practice questions.
Prohibited activities
| Activity | What it is |
|---|---|
| Insider trading | Trading on, or passing on, material non-public information |
| Front running | Trading ahead of a customer’s large order to profit from its expected effect on the price |
| Churning | Excessive trading in a customer’s account to generate commissions |
| Marking the close | Placing trades near the end of the day to move a security’s closing price |
| Painting the tape (wash trading) | Trades with no real change in ownership, meant to make a security look actively traded |
| Guaranteeing against loss | Promising a customer they won’t lose money |
| Commingling | Mixing customer funds or securities with the firm’s or the representative’s own |
| Selling dividends | Encouraging a customer to buy shares just before a dividend, implying the dividend is extra value |
| Unauthorized trading | Trading in a customer’s account without permission |
| Sharing in a customer’s account | Sharing in gains or losses without the firm’s approval and the customer’s written consent, in proportion to the representative’s investment |
Free SIE prohibited activities practice questions
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A representative learns a customer is about to place a very large buy order, and buys the stock for their own account first. This is:Answer: BTrading ahead of a customer's large order to profit from its expected price effect is front running.
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A representative makes many trades in a customer's account mainly to earn commissions. This is:Answer: AExcessive trading to generate commissions, without regard to the customer's interests, is churning.
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An employee hears about an unannounced merger at work and buys the target company's stock. This is:Answer: CTrading on material, non-public information is insider trading.
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A representative tells a customer, "If this stock goes down, I'll cover your loss." This is:Answer: CGuaranteeing a customer against loss is prohibited.
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Placing buy orders in the last minutes of trading to push up a stock's closing price is:Answer: BTrading near the close to influence the closing price is marking the close, a form of market manipulation.
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A representative deposits a customer's check into their own personal bank account. This is:Answer: AMixing customer funds with the representative's own money is commingling, and it's prohibited.
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