Milton Brown Is a Business Consultant and Obtained Confidential Information

question 52

Essay

Milton Brown is a business consultant and obtained confidential information about a publicly traded corporation which, if made public, would cause the stock to rise dramatically. Milton formed a private corporation with himself as the sole shareholder and director and had that corporation purchase stock in the publicly traded corporation. When the news which Milton was aware of became public the price of the publicly traded shares increased dramatically and the corporation Milton has formed sold its shareholdings at a substantial profit. Milton is subsequently charged with insider trading, that is, using confidential information for his own personal gain. His defense is that the gain was made by his corporation and not by himself and his corporation is a separate legal entity. Will Milton's defense be successful? Give the legal basis for your answer.

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Definitions:

Price-Taking Farmer

An agricultural producer who has no control over the prices of the products they sell and must accept the prevailing market prices.

Corn Output

The total amount of corn produced, often considered in agricultural and economic studies regarding productivity and market supply.

Workers

Workers refer to individuals engaged in any form of economic activity or labor, often for compensation, within various sectors of an economy.

Price-Taking Farmer

An individual farmer who does not have the ability to set the prices for their goods but instead accepts the market price.