The CEO of Big Ships knows his company has won a $2 billion contract to build ships for the Navy. He is told by the Navy to keep this quiet until the official announcement. Knowing that Big Ships stock will rise when the announcement is made, he tells his children to buy as much Big Ships stock as they can right away. He does not buy any stock. The CEO may:

Question

Quizplus · Accepted Answer

The CEO of Big Ships may be sued for insider trading because he provided inside information to his relatives, which is a violation of his fiduciary duty to keep the information confidential. The fact that he did not engage in the trade himself is not relevant to the case. The Dirks case ruling does not apply to this scenario, as the CEO intentionally provided the information to his children for personal gain. The existence of any contractual provisions related to trading is also not relevant in this case.

The CEO of Big Ships Knows His Company Has Won