Fact Pattern 20-2
Sid,a director of Tech Software Company,learns that a Tech engineer has developed a new,exciting video game.Sid buys Tech stock and tells his friend Uri,who also buys Tech stock.When the new game is released three weeks later,Sid and Uri sell their stock for a big profit.
-Refer to Fact Pattern 20-2.Under SEC Rule l0b-5,Sid would not be li-able if he had waited to buy Tech stock until

Question

​Fact Pattern 20-2 
Sid,a director of Tech Software Company,learns that a Tech engineer has developed a new,exciting video game.Sid buys Tech stock and tells his friend Uri,who also buys Tech stock.When the new game is released three weeks later,Sid and Uri sell their stock for a big profit.
-Refer to Fact Pattern 20-2.Under SEC Rule l0b-5,Sid would not be li-able if he had waited to buy Tech stock until​

Quizplus · Accepted Answer

SEC Rule 10b-5 prohibits insider trading, which occurs when someone who has access to non-public information about a company buys or sells stock based on that information. In this case, Sid had inside information about the new video game, and he purchased Tech stock before the public release of that information. This constitutes insider trading, and Sid would be liable for violating Rule 10b-5. However, if he had waited to buy the stock until after the public release of the game, he would not have had inside information, and therefore would not have violated the rule.

​Fact Pattern 20-2

Fact Pattern 20-2