Fact pattern 23-1
Trudy was hired by Food Corporation to handle a products liability lawsuit brought against it alleging that it distributed dangerous dog biscuits.Trudy's investigation has brought to light facts establishing that the biscuits were not defective and that the problem actually law with improper retention policies of retailers.Trudy is aware that this information will result in the stock of Food Corporation increasing dramatically.Trudy immediately buys shares of Food Corporation and tells her fiancé,Frank,about the expected increase as well.Trudy tells Frank because she wants to borrow money from him for the trade and also because she believes that his investment will enable them to take a nicer honeymoon.Trudy's suspicions come true.The lawsuit is dismissed,the stock increases dramatically,and she and Frank go on a great honeymoon.The day after they return,an investigator from U.S.Attorney's Office interviews her regarding her trades and those of Frank.
-Refer to fact pattern 23-1.Can Trudy be considered an insider of Food Corporation?

Question

Quizplus · Accepted Answer

Trudy can be considered a temporary insider since she was hired by Food Corporation to handle the lawsuit and had access to material nonpublic information about the company's situation. Her knowledge about the impending increase in stock value based on the dismissal of the lawsuit constituted inside information.

Fact Pattern 23-1 Trudy Was Hired by Food Corporation to Handle a Products