A Shareholder Who Was Buying Additional Shares in Wayport, Inc

question 110

Multiple Choice

A shareholder who was buying additional shares in Wayport, Inc., told the shareholder seller "he was not aware of any bluebirds of happiness in the corporation's world." However, at the time the buyer made the statement he was aware that the CEO had informed the board via e-mail of a patent sale by Wayport that meant that the corporation would receive net proceeds of $7.6 million and would increase its year-end cash position by 22%. Which of the following statements is correct?

• A) The statement was too general to constitute a basis for a 10(b) claim.
• B) The statement would need to contain numbers to be a material misrepresentation.
• C) The buyer has done nothing wrong unless he was the CEO or a member of the board.
• D) The seller has a 10(b) claim against the seller.

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Definitions:

Avoidant

A personality trait characterized by a pervasive pattern of social inhibition, feelings of inadequacy, and hypersensitivity to negative evaluation.

Frustration-aggression Hypothesis

A psychological theory suggesting that frustration often leads to aggressive behavior, as aggression is considered a result of being prevented from achieving a goal.

Displacement

A psychological defense mechanism in which a person redirects a negative emotion from its original source to a less threatening recipient.