An IT project coordinator for a publicly traded medical device firm accidentally overhears executive board members discussing an unannounced regulatory approval while servicing boardroom equipment. She shares this confidential information with her spouse, who promptly purchases call options on the company's stock prior to the public announcement. The coordinator does not trade any securities herself and receives no direct cash payment from her spouse. Under federal securities laws governing insider trading, which of the following statements are correct?
- The spouse can be held liable as a tippee for trading on material nonpublic information even though he is not an employee of the company.Cevap
- The IT project coordinator can be held liable as a tipper even if she did not personally execute any trades in the company's stock.Cevap
- CThe spouse is completely exempt from insider trading liability because the coordinator acquired the information through accidental listening rather than authorized corporate channels.
- DThe IT project coordinator is immune from tipper liability because she did not receive direct monetary compensation from her spouse in exchange for the tip.
Cevap
The spouse can be held liable as a tippee despite not being employed by the firm, and the IT project coordinator can be held liable as a tipper even without executing personal trades.
Both the statement indicating that the spouse can be held liable as a tippee despite not being employed by the firm, and the statement indicating that the coordinator can be held liable as a tipper without executing trades, are correct. Insider trading provisions cover individuals outside the corporation who trade on material nonpublic information (tippees) as well as employees who pass along confidential information to family members (tippers).
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Tipper and Tippee Liability under Insider Trading Rules