Fact Pattern 31-3 Dhani, an Accountant for Eureka, Inc., Learns of Undisclosed Company

question 27

Multiple Choice

Fact Pattern 31-3
Dhani, an accountant for Eureka, Inc., learns of undisclosed company plans to market a new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals 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 information from Dhani. When Eureka publicly announces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit.
-Refer to Fact Pattern 31-3. Under the Securities Exchange Act of 1934, Geoff is most likely

• A) liable for insider trading.
• B) not liable because Geoff did not prevent others from profiting.
• C) not liable because Geoff did not solicit information from Dhani.
• D) not liable because Geoff does not work for Eureka.

---

Definitions:

Mark-up

The margin calculated by subtracting the cost of a product or service from its sale price, then dividing by the cost, expressed as a percentage.

Retail Price

The price at which goods are sold to the public, typically higher than the wholesale price.

Mark-up

Increment on the buying price of products targeted to offset operational costs and profits.

Selling Price

The price at which a product or service is sold to the consumer.