Fact Pattern 21-3 (Questions 23-26 apply)
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 21-3. 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 stock based on material nonpublic information obtained through a chain of insiders, starting with Dhani, who had a duty to keep the information confidential. The fact that he did not prevent others from profiting or solicit information from Dhani is irrelevant. The fact that he does not work for Eureka is also irrelevant.

Fact Pattern 21-3 (Questions 23-26 Apply)