Fact Pattern 42-1B (Questions B12-B13 apply)
Dhani, an accountant for Eureka! Inc. learns of undisclosed com?pany plan?s to market a new laptop. Dhani buys 1,000 shares of Eureka stock. He re?veals the company plans to Fay, who tells Geoff. Both Fay and Geoff buy 100 shares. Geoff knows that Fay got her informa?tion from Dhani. When Eureka! publicly an?nounces its new laptop, Dhani, Fay, and Geoff sell their stock for a profit.
-Refer to Fact Pattern 42-1B. Under the Securities Ex?change Act of 1934, Geoff is most likely

Question

Quizplus · Accepted Answer

Geoff is liable for insider trading because he knowingly traded on insider information passed on to him by Fay, who received it from Dhani, an insider with Eureka! Inc. This makes Geoff a tippee liable for insider trading. Even though he did not obtain the information directly from an insider, he knew that the information was obtained illegally and used it to make a profit. Therefore, he can be held liable under the Securities Exchange Act of 1934.

Fact Pattern 42-1B (Questions B12-B13 Apply)