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,Geoff 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,Geoff is most likely

Quizplus · Accepted Answer

Geoff is most likely liable for insider trading because he traded on material nonpublic information that he knew or should have known was obtained through a breach of fiduciary duty by Dhani through disclosing confidential company plans. It does not matter whether he solicited the information or prevented others from profiting from it, or whether he worked for Eureka. The Securities Exchange Act of 1934 prohibits insider trading, regardless of the trader's connection to the company.