Fact Pattern 42-1B
Sid,a director of Tech Software Company,learns that a Tech engineer has developed "Ur Call," a new,exciting video game.Sid buys Tech stock and tells his friend Velma,who also buys Tech stock.When the new game is released three weeks later,Sid and Velma sell their stock for a big profit.
-Refer to Fact Pattern 42-1B.Under SEC Rule l0b-5,Sid would not be li?able if he had waited to buy Tech stock until

Question

Fact Pattern 42-1B 
Sid,a director of Tech Software Company,learns that a Tech engineer has developed "Ur Call," a new,exciting video game.Sid buys Tech stock and tells his friend Velma,who also buys Tech stock.When the new game is released three weeks later,Sid and Velma sell their stock for a big profit.
-Refer to Fact Pattern 42-1B.Under SEC Rule l0b-5,Sid would not be li?able if he had waited to buy Tech stock until

Quizplus · Accepted Answer

SEC Rule 10b-5 prohibits insider trading, which is the buying or selling of securities based on material nonpublic information. Here, Sid learned of the development of the new video game before it was released, which is material nonpublic information. By buying Tech stock and selling it for a profit, Sid engaged in insider trading. However, if Sid had waited to buy Tech stock until after the public release of the game, the information would no longer be considered material nonpublic information, and Sid would not be liable for insider trading. Therefore, the best choice is C.