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, Geoff 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, Geoff is most likely

Quizplus · Accepted Answer

Geoff is most likely liable for insider trading because he purchased Eureka stock based on non-public information obtained from Fay, who received it from Dhani, an insider. The Securities Exchange Act of 1934 prohibits trading on material, non-public information obtained from company insiders, or from someone who obtained the information from an insider. There is no requirement that Geoff prevented others from profiting or solicited information from Dhani, or that he works for Eureka, for him to be liable for insider trading.