Fact Pattern 27-2
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 27-2.Under the Securities Ex?change Act of 1934,Fay is most likely

Question

Fact Pattern 27-2 
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 27-2.Under the Securities Ex?change Act of 1934,Fay is most likely

Quizplus · Accepted Answer

Fay is most likely liable for insider trading because she purchased stock based on nonpublic information from an insider (Dhani). The fact that she shared the information with others and did not prevent them from profiting does not absolve her of liability. The fact that she did not solicit the information from Dhani and does not work for Eureka is also irrelevant to her liability under the Securities Exchange Act of 1934.