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 tells Geoff. Both Fay and Geoff buy 100 shares. Geoff knows that Fay got her information from Dhani. When Eureka! publicly announces its new laptop,Dhani,Fay,and Geoff sell their stock for a profit.
-Under the Securities Exchange Act of 1934,Geoff is most likely

Question

Quizplus · Accepted Answer

Geoff is most likely liable for insider trading because he knew that the information he received was insider information from Dhani, who was an insider. Even though Fay was the direct tippee, Geoff also acted on the same material non-public information and profited from it, making him liable under the Securities Exchange Act of 1934. Being too far down the chain of disclosure or trading based on a material fact does not absolve one from liability for insider trading.

Dhani,an Accountant for Eureka! Inc