Quick Answer
A false price on a statement or confirmation can mislead the customer about a transaction, position, or account value. Falsifying a statement or confirmation is prohibited, regardless of whether the price change favors or disfavors the customer. Improperly withholding either document is also prohibited.
What Does a False Price Do?
A false price changes the story that the document tells. The customer may see an incorrect transaction price, position value, or account value. That error can make a purchase, sale, gain, loss, or account balance appear more favorable or less favorable than it is.
| Document | What the customer should be able to understand | What a false price can conceal |
|---|---|---|
| Confirmation | The security, quantity, and transaction price | The actual terms of the purchase or sale |
| Account statement | The positions, balances, and activity reported for the account | A valuation error, account discrepancy, or unfavorable result |
An account statement can contain a pricing problem even when no trade occurred during the statement period. A position value can still be false.
How Do Falsifying and Withholding Differ?
| Conduct | Effect on the customer |
|---|---|
| Falsifying a statement or confirmation | The customer receives information that is untrue or misleading |
| Withholding a statement or confirmation | When delivery is required, the customer cannot review the information or report a discrepancy |
Exam Tip: Gotchas
Withholding and falsifying are separate forms of misconduct. A completely accurate document can still be improperly withheld. A delivered document can still be falsified.
What Should You Check on Exam Day?
- Identify what the document tells the customer.
- Treat an unsupported price change or concealed discrepancy as a document-integrity concern.
- Treat falsifying and withholding as separate prohibited conduct.