Fact Pattern 20-3 Dhani,an Accountant for Eureka,Inc.,learns of Undisclosed Com-Pany Plan-S to Market

question 28

Multiple Choice

Fact Pattern 20-3
Dhani,an accountant for Eureka,Inc.,learns of undisclosed com-pany plan-s to market a new laptop.Dhani buys 1,000 shares of Eureka stock.He re-veals the company plans to Fay,who buys 500 shares.Fay tells Geoff,who tells Hu.Both Geoff and Hu buy 100 shares.They know that Fay got her informa-tion from Dhani.When Eureka publicly an-nounces its new laptop,Dhani,Fay,Geoff,and Hu sell their stock for a profit.
-Refer to Fact Pattern 20-3.Under the Securities Ex-change Act of 1934,Hu is most likely

• A)liable for insider trading.
• B)not liable because Hu is only a tippee,not a tipper.
• C)not liable because Hu is too far down the chain of disclosure.
• D)not liable because Hu traded on the basis of a true fact.

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Definitions:

Extraverted

Characterized by an outward-focused orientation, enjoying social interactions, and drawing energy from being around other people.

Single-Parent Families

Households led by one parent, who is responsible for raising children, often facing distinctive challenges.

External

Originating from outside; not inherent or internal.

Locus of Control

A psychological concept referring to the degree to which individuals believe that they have control over the outcome of events in their lives.