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D. VSS
Answer: B
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NEW QUESTION: 3
Ms. Ears is an investment adviser representative. During lunch today, she overheard two men talking
about a hostile takeover that their firm was preparing to undertake. Based on this information, Ms. Ears
does not hesitate to advise the client she meets with immediately after lunch-Mrs. Clueless-- to invest a
sum of money in the firm the men had named as the target firm. Ms. Ears remembers that the price of
target firms, on average, increases significantly with an announcement of this sort, but she does not
inform Mrs. Clueless of the reason underlying her recommendation. Has there been any violation of
insider trading laws in this scenario, as described?
A. No. Ms. Ears is not considered to be an insider of the company preparing the hostile takeover.
B. No. The scenario does not suggest that Ms. Ears herself made any investment in the target firm, and
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C. Yes. In making a recommendation based on information that was not publicly available, Ms. Ears has
violated insider trading laws and is subject to both civil and criminal penalties.
D. Yes. Both Ms. Ears and the two men have violated insider trading laws. The two men are prohibited
from discussing such private information in a public setting, and Ms. Ears is prohibited from making a
recommendation based on that information.
Answer: C
Explanation:
Yes. In making a recommendation based on overhearing news of an upcoming hostile
takeover-- information that was not publicly available--Ms. Ears has violated insider trading laws and is
subject to both civil and criminal penalties. The men, although guilty of indiscretion in their conversation,
have not violated any securities' laws.
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Aalk - 2014-05-05 16:45:18
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