A member of a publicly traded corporation's board of directors discloses confidential, unannounced acquisition plans to a personal friend during a private dinner. The friend immediately buys 1,000 shares of the target company's stock before the public announcement. Which of the following statements correctly describes liability under federal insider trading regulations?
- Both the board member (as tipper) and the friend (as tippee) can be held liable for insider trading violations.Cevap
- BOnly the board member can be held liable because the friend is not an employee or official insider of the corporation.
- CNeither individual can be held liable because private discussions between personal friends are protected communications.
- DOnly the friend can be held liable because the board member did not execute any stock trades directly.
Cevap
Both the board member (as tipper) and the friend (as tippee) can be held liable for insider trading violations.
Federal securities laws state that when an insider (tipper) breaches a fiduciary duty by sharing material nonpublic information, and the recipient (tippee) trades on that information, both parties inherit legal liability for insider trading.
Adım Adım Çözüm
Anahtar Kavram
Tipper and Tippee Liability under Insider Trading Law
Tahmini Süre:1m 0s