Asked by Changhao Zhang on May 17, 2024
Verified
Cam, an accountant for Discount Inc., learns that the company's soon-to-be-announced quarterly sales figures exceed analysts' expectations. Cam tells Ed, who tells Frye, who buys 100 shares of the company's stock. Frye knows that Ed got the information from Cam. When Discount publicly announces the figures, Frye sells the stock for a profit. Under the Securities Exchange Act of 1934, Ed is most likely
A) liable for insider trading.
B) not liable because Ed did not prevent others from profiting.
C) not liable because Ed did not misappropriate any information.
D) not liable because Ed does not work for Discount.
Insider Trading
The unlawful act of conducting trades on the stock market for personal gain by exploiting privileged, non-public information.
Securities Exchange Act
A federal law governing the trading of securities, such as stocks and bonds, aimed at protecting investors and maintaining fair and orderly markets.
Misappropriate
The act of dishonestly or unfairly taking something, especially money, for one's own use.
- Analyze the roles and responsibilities of individuals in avoiding securities fraud.
Verified Answer
Learning Objectives
- Analyze the roles and responsibilities of individuals in avoiding securities fraud.
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