Fact Pattern 20-3
Dhani,an accountant for Eureka,Inc.,learns of undisclosed com-pany plan-s to market a new laptop.Dhani buys 1,000 shares of Eureka stock.He re-veals 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 informa-tion from Dhani.When Eureka publicly an-nounces its new laptop,Dhani,Fay,Geoff,and Hu sell their stock for a profit.
-Refer to Fact Pattern 20-3.Under the Securities Ex-change Act of 1934,Geoff is most likely

Question

Quizplus · Accepted Answer

Geoff is most likely liable for insider trading because he bought Eureka stock based on inside information obtained from Fay who in turn received it from Dhani. It does not matter whether or not he solicited the information or prevented others from profiting, as long as he traded on material nonpublic information, he may be held liable for insider trading under the Securities Exchange Act of 1934.

Fact Pattern 20-3 Dhani,an Accountant for Eureka,Inc.,learns of Undisclosed Com-Pany Plan-S to Market