3. In a release dated November 5, 2001, the SEC announced in a litigation release an action against Israel Shenker. In this announcement, the SEC provided the following example of a series of transactions executed by Shenker:

14:44:44—Shenker placed an order to buy 500 shares of the target security at $34.0625, and directed that it be routed to the ECN. The order raised the NBBO bid price from $31.50 to $34.0625.

14:44:46—Shenker entered a limit order to sell 500 shares of the target security through SOES at a price of $34.0625, and the order was immediately executed.

14:44:48—Shenker canceled his buy order, causing the NBBO bid price to drop from $34.0625 to

$31.25.

By manipulating the public quote to obtain a better execution price for his 500-share sell order, Shenker was unjustly enriched in the amount of $1,281.25 (Securities and Exchange Commission, 2001).

a. What is the name of the type of market abuse alleged by the SEC?

b. Why were these manipulations not considered to be wash sales?

c. Why was the activity alleged by this announcement illegal?