Which one of the following is most apt to be considered insider trading?
A) Stu overhears Martha say that she is being promoted to sales manager.
B) Cathy compiles the financial statements and knows that net income for the latest quarter is significantly below analyst's forecasts.
C) Wes is an outside auditor and has found what he believes are significant accounting irregularities in a company's financial reports.
D) Theresa buys stock in ABC after she overhears a conversation between the firm's president and his wife concerning a proposed acquisition.
E) Lester buys shares of stock in his firm through his company retirement plan on a regular monthly basis.

Question

Quizplus · Accepted Answer

Insider trading involves a person trading on material non-public information. In this case, Theresa has acted on information she overheard, which was not available to the public and may influence the decision to buy stock. This is most apt to be considered insider trading. A, B, C, and E may not necessarily constitute insider trading as the information was obtained through legitimate means and/or was available to the public.

Which One of the Following Is Most Apt to Be