Fact Pattern 42-2A (Questions A13-A14 Apply)

question 14

Multiple Choice

Fact Pattern 42-2A (Questions A13-A14 apply)
Dhani,an accountant for Eureka,Inc.,learns of undisclosed com?pany plan?s to market a new laptop.Dhani buys 1,000 shares of Eureka stock.He re?veals the company plans to Fay,who buys 500 shares.Fay tells Geoff,who tells Hu,each of whom buy 100 shares.They knows that Fay got her informa?tion from Dhani.When Eureka publicly an?nounces its new laptop,Dhani,Fay,Geoff,and Hu sell their stock for a profit.
-Refer to Fact Pattern 42-2A.Under the Securities Ex?change Act of 1934,Fay is most likely

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

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Definitions:

Fringe Benefit Systems

A collection of non-wage compensations provided to employees in addition to their normal wages or salaries.

Job Performance

The level of effectiveness and efficiency with which an individual fulfills their designated job roles and responsibilities.

Total Compensation

The complete package of direct financial benefits (like salary, bonuses) and indirect benefits (such as health insurance, pensions) that an employee receives from an employer.

ESOP

Employee Stock Ownership Plan, a program that provides company stock to employees as part of their compensation.