Directors a and B of a Large,publicly Traded Company Filed

question 111

Multiple Choice

Directors A and B of a large,publicly traded company filed advance reports of their plans to sell stock.Such advanced filed plans allow directors and officers to sell shares without having to worry about whether they have inside information at the time of the sale.The dates for their sales are locked in for one year.Directors A and B have,however,encouraged the CEO to announce a boost in sales and revenues prior to the quarterly financial statement release because such an announcement would allow the information to go public and thereby allow them to sell their shares,according to their prior-approved plan,at a much higher price.Which of the following is correct?

• A)Directors A and B have engaged in insider trading.
• B)Directors A and B have violated their fiduciary duty as directors by requesting the advance announcement.
• C)Directors A and B have violated Section 16(b).
• D)Directors A and B have not violated 10(b).

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Definitions:

Violation-of-Expectation Tasks

Research methods used in cognitive psychology to study understanding or awareness by observing reactions to unexpected outcomes.

A-not-B Tasks

Cognitive tests used to assess the understanding of object permanence in infants, typically involving hiding an object in one location and observing if the infant can find it.

Information Processing System

A system, either computer-based or human, that processes information through stages including input, processing, output, and storage.

Lifespan

The duration of time from an individual's birth to their death.