Fact Pattern 22-1 Trudy Was Hired by Food Corporation to Handle a Products

question 61

Multiple Choice

Fact Pattern 22-1
Trudy was hired by Food Corporation to handle a products liability lawsuit brought against it alleging that it distributed dangerous dog biscuits. Trudy's investigation brought to light facts establishing that the biscuits were not defective and that the problem actually involved improper retention policies on the part of retailers. Trudy is aware that this information will result in the stock of Food Corporation increasing dramatically. Trudy immediately buys shares of Food Corporation and tells her fiancé, Frank, about the expected increase as well. Trudy tells Frank because she wants to borrow money from him for the trade and also because she believes that his investment will enable them to take a nicer honeymoon. Frank initially resists because of his training in business law and his concern that trading on the information would violate federal law, but he ends up going along with Trudy because he too wants a nice honeymoon. Trudy's suspicions come true. The lawsuit is dismissed, the stock increases dramatically, and she and Frank go on a great honeymoon. The day after they return, an investigator from U.S. Attorney's Office interviews her regarding her trades and those of Frank.
-Refer to Fact Pattern 22-1.Can Trudy be considered an insider of Food Corporation?

• A) No
• B) Yes, as a derivative insider.
• C) Yes, as a temporary insider.
• D) It depends on whether she was paid as an employee or independent contractor because she may be considered an insider only if she was paid as an employee.

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Definitions:

Macrophage

A type of white blood cell that engulfs and digests cellular debris, foreign substances, and pathogens, playing an essential role in the immune response.

Lymphocytes

A type of white blood cell that is an essential component of the immune system, helping the body to fight infections and diseases.

Sympathetic Nervous System

Part of the autonomic nervous system that prepares the body for physical activity by accelerating heart rate, constricting blood vessels, and raising blood pressure.

Type A Individuals

Persons characterized by a competitive, aggressive, and highly organized approach to life, often associated with a higher risk of heart disease.