Who might be liable for insider trading

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Reference no: EM132253199

1. If Jack was to buy the stock in GreenLife Company, based on Susan's advice about the merger, who might be liable for insider trading?

a. Jack only.

b. Neither Susan nor Jack.

c. Both Susan and Jack.

d. Susan only.

2. If Jack were to buy the stock in GreenLife Company, based on Susan's advice about the merger, under what theory might he liable for insider trading?

a. The tipper/tippee theory, with Jack being the tipper and Susan being the tippee.

b. No theory, since he is not an insider.

c. The tipper/tippee theory, with Susan being the tipper and Jack being the tippee.

d. The misappropriation theory, since Jack misappropriated the information.

3. If Susan were found to be liable for insider trading in this transaction, which of the following is true?

a. She could have criminal charges brought against her.

b. The SEC could bring a civil lawsuit against her.

c. All of these.

d. She could be sued civilly by other shareholders who lost money because of the inside trade.

4. Would Hal (the maitre d') be liable for insider trading, if he bought stock in GreenLife Company based on the information that he received from Jack?

a. Yes, under the tipper/tippee theory because Hal is a tipper.

b. Yes under the tipper/tippee theory, but only if he knew that the source of Jack's information was an insider.

c. Yes under Section 16(b) of the 1934 Act, because the purchase would meet the definition of a short-swing transaction.

d. Yes, under the misappropriation theory because Jack is an insider.

Reference no: EM132253199

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