Sid,a director of Tech Software Company,learns that a Tech engineer has developed a new,exciting video game.Sid buys Tech stock and tells his friend Uri,who also buys Tech stock.When the new game is released three weeks later,Sid and Uri sell their stock for a big profit.
-Refer to Fact Pattern 26-2.Under SEC Rule l0b-5,Sid would not be li-able if he had waited to buy Tech stock until

Question

Quizplus · Accepted Answer

SEC Rule 10b-5 prohibits insider trading, which occurs when a person trades a security based on material, non-public information. Sid became aware of the new video game before it was released and bought Tech stock in anticipation of a price increase. This would be considered insider trading and Sid could be liable under Rule 10b-5. However, if Sid had waited to buy Tech stock until after the public release of the game, he would not have possession of material non-public information and would not be liable under Rule 10b-5.

Sid,a Director of Tech Software Company,learns That a Tech Engineer