Robert was the president of JKL,Inc.JKL intended to purchase Target Co.JKL's intent was not public information,and when it became public,Target's stock would increase significantly in value.Robert individually bought 1,000 shares of Target Co.Ten months later,when the merger was publicly announced,Robert sold Target's stock and made a large profit.Assuming that Robert is guilty of a violation under the 1934 Securities and Exchange Act,what are the possible consequences?

Question

Quizplus · Accepted Answer

As Robert had access to insider information about the merger, his purchase and subsequent sale of Target Co stock would be considered insider trading, which is a violation of section 10b-5 of the 1934 Securities and Exchange Act. Therefore, the consequences could involve rescission of the sale and recovery of the stock by the original owners, lawsuits against Robert for damages, and criminal charges filed by the government that could lead to fines and/or imprisonment. All three options are possible consequences of the violation.

Robert Was the President of JKL,Inc