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

question 31

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, 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.

---

Definitions:

Major Significance

A term indicating something with great importance, influence, or value in a particular context or overall.

Affair

An emotional or sexual relationship with someone other than one's spouse or partner.

Extramarital Sex

Sexual activity engaged in by a married person with someone other than their spouse.

Premarital Sex

Engaging in sexual activity before marriage.