Presidential Profits.Linda was president of a publicly traded tractor company,Tough Tractors.Linda became aware that stock in her company would likely increase significantly in value because her company had a contract to purchase the assets of Rough Tractors.The boards of both companies wanted the information kept confidential until the purchase was complete and a news release was made.Before the news was made public,Linda immediately purchased a significant number of shares in Tough Tractors.Linda also told her friend Frank about the contract to purchase assets.Frank,who knew that the information was not public,told his brother,George.Frank and George purchased a number of shares of stock in Tough Tractors prior to any public announcement of the sale.After the public announcement was made and the purchase of assets went through,Linda,George and Frank,all sold their shares in Tough Tractors and made a significant profit.Which of the following would describe Frank in providing information about the asset sale to George?

Question

Quizplus · Accepted Answer

The tipper/tippee theory holds that any individual who acquires material inside information as a result of an insider's breach of duty has engaged in insider trading.This individual,one who has received a tip from an insider,is called a tippee.The insider who gives the inside tip is called the tipper.This original tippee who passes on insider information to another person now is acting as a tipper.