Fact Pattern 21-2 (Questions 21-22 apply)
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 21-2. 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 l0b-5 prohibits insider trading, which is the buying or selling of securities based on material non-public information. In this case, Sid had material non-public information about the new video game, and he used this information to make a profit in the stock market. However, if he had waited to buy Tech stock until after the public release of the game, the information would no longer be considered non-public, and he would not be liable for insider trading.

Fact Pattern 21-2 (Questions 21-22 Apply)