Rico Does Not Work for Street Bikes Company, but Wrongfully

question 8

Multiple Choice

Rico does not work for Street Bikes Company, but wrongfully obtains inside information concerning the firm. Based on the information, Rico buys and sells Street Bikes stock for personal gain. The Securities and Exchange Commission prosecutes Rico, arguing that he is liable because he stole information rightfully belonging to another. This argument is​

• A) ​the blue-sky theory.
• B) ​the misappropriation theory.
• C) ​the free-writing prospectus theory.
• D) ​the tipper/tippee theory.

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Definitions:

Subsequent Ratification

The act of officially approving or confirming a decision or agreement after it has already been made or implemented.

Principal's Identity

Information that discloses or specifies who the principal (the party for whom an agent acts) is in an agency relationship.

Legal Capacity

The ability of an individual or entity to enter into legally binding contracts, including the ability to sue and be sued, own property, and engage in other legal activities.

Unauthorized Acts

Actions taken by an individual or entity without legal or official approval, which may be illegal or against regulatory standards.