Question

A member firm allocates shares of an IPO to the CEO of a different company that is considering the possibility of using the member firm for its IPO. This action is:A. Flipping, a prohibited activityB. Spinning, a permitted activityC. Flipping, a permitted activityD. Spinning, a prohibited activit

Answer 1

D. Spinning, a prohibited activity

Step-by-step explanation:

Spinning is a prohibited activity.

In this a member firm allocates shares of a new issue to certain decision makers.

These decision makers may be the executive officers, directors, (former or current ) or prospective customers and also, it can be person who is materially supported by the executives or directors.