In USVMcGee,McGee Purchased a Substantial Amount of a PHLY Stock After

question 62

Multiple Choice

In U.S.v.McGee,McGee purchased a substantial amount of a PHLY stock after a confidential conversation with a PHLY insider who was a fellow member of Alcoholics Anonymous.The PHLY stock subsequently showed a substantial profit.When the SEC brought charges of insider trading against McGee,the court found

• A) McGee was convicted of insider trading for violating a fiduciary duty of confidentiality.
• B) McGee was convicted of insider trading despite the absence of a fiduciary duty, because any duty of confidentiality, trust, loyalty, or confidence would suffice to establish misappropriation liability.
• C) McGee was not guilty of insider trading because he had no fiduciary relationship with PHLY.
• D) McGee was not guilty of insider trading because a promise of confidentiality for purposes of alcoholism treatment is not the same as a fiduciary duty to establish misappropriation liability.

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