Fact Pattern 7-3
Dan, an accountant for Eureka! Inc. learns of undisclosed company plans to market a new laptop. Dan buys 1,000 shares of the firm's stock. He reveals the company plans to Fay, who tells Greg. Both Fay and Greg buy 100 shares. Greg knows that Fay got her information from Dan. When Eureka! publicly announces its new laptop, Dan, Fay, and Greg sell their stock for a profit.
-Refer to Fact Pattern 7-3. Under the Securities Exchange Act of 1934, Geoff is most likely

Question

Fact Pattern 7-3
Dan, an accountant for Eureka! Inc. learns of undisclosed company plans to market a new laptop. Dan buys 1,000 shares of the firm's stock. He reveals the company plans to Fay, who tells Greg. Both Fay and Greg buy 100 shares. Greg knows that Fay got her information from Dan. When Eureka! publicly announces its new laptop, Dan, Fay, and Greg sell their stock for a profit.
-Refer to Fact Pattern 7-3. Under the Securities Exchange Act of 1934, Geoff is most likely​

Quizplus · Accepted Answer

Geoff, as a tippee, may be held liable for insider trading because he knew that the information about Eureka's new laptop came from Dan, who was an insider, and he bought stock based on that information. Even though Fay was the one who passed on the information to Geoff, he still knew it was inside information and acted on it, making him liable as well.

Fact Pattern 7-3 Dan, an Accountant for Eureka! Inc. Learns of Undisclosed Company