Fact Pattern 19-2
Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100 shares. They know that Fay got her information from Dhani. When Eureka publicly announces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
-Refer to Fact Pattern 19-2. Under the Securities Exchange Act of 1934, Fay is most likely

Question

Fact Pattern 19-2 
Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to Fay, who buys 500 shares. Fay tells Geoff, who tells Hu. Both Geoff and Hu buy 100 shares. They know that Fay got her information from Dhani. When Eureka publicly announces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
-Refer to Fact Pattern 19-2. Under the Securities Exchange Act of 1934, Fay is most likely

Quizplus · Accepted Answer

Based on the fact pattern, Fay is most likely liable for insider trading because she bought Eureka stock based on material, nonpublic information from Dhani, who was an insider. It does not matter if Fay prevented others from profiting or if she solicited the information from Dhani. The fact that she traded based on inside information is what makes her liable under the Securities Exchange Act of 1934.