Dee,an Accountant,does Not Work for Emergent Company,but Wrong-Fully Obtains Inside

question 38

Multiple Choice

Dee,an accountant,does not work for Emergent Company,but wrong-fully obtains inside information concerning Emergent.Based on the in-forma-tion,Dee buys and sells Emergent stock for personal gain.The Securities and Exchange Commission prose-cutes Dee,arguing that she is liable because she stole in-formation right-fully belonging to another.This argument is

• A)the blue-sky theory.
• B)the misappropriation theory.
• C)the red-herring theory.
• D)the tipper/tippee theory.

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Definitions:

Bondholder

A bondholder is an investor or entity that owns bonds issued by corporations or governments and is entitled to receive periodic interest payments and the return of the bond's face value at maturity.

Negative Covenant

A clause in a contract that restricts certain actions by the party involved, often used in lending agreements to protect the lender.

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuing company’s equity shares at certain times during their life, usually at the discretion of the bondholder.

Traded Stock

Shares of a company that are bought and sold in public markets, such as stock exchanges, representing ownership interests in the corporation.