Fact Pattern 19-1

question 55

Multiple Choice

Fact Pattern 19-1
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 19-1. Under SEC Rule l0b-5, Sid would not be liable if he had waited to buy Tech stock until

• A) after Sid told Uri of the new game.
• B) after Uri bought Tech stock.
• C) after the public release of the game.
• D) just before the game was released.

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Definitions:

Limit-Buy Order

An order to purchase a security at or below a specified price, ensuring the buyer pays no more than the predetermined price.

Limit-Sell Order

A type of stock market order where a seller sets the minimum price they are willing to accept for a security, and the trade only executes if the market price meets or exceeds that price.

Stop-Loss

An order placed with a broker to buy or sell once the stock reaches a certain price, designed to limit an investor's loss on a security position.

Shelf Registration

Advance registration of securities with the SEC for sale up to 2 years following initial registration.