Assume Ken Hastings (cookout host) and Tim Daniels (Ken’s tennis partner) both bought stock in New World Industries as soon as the market opened
Assume Ken Hastings (cookout host) and Tim Daniels (Ken’s tennis partner) both bought stock in New World Industries as soon as the market opened on Monday and all profited 30% after the press announcement by Mrs. Chen. Pursuant to their agreement, Tim Daniels paid Ken Hasting 5% of the profit he made on the transaction.
With regard to Judith Chen, Steve Chen, Ken Hastings and Tim Daniels, which of these parties could be considered an “insider” under rule 10(b)(5) of the Securities Act of 1934? Explain why or why not.
Which of these parties could have tipper or tippee liability in this case?
Did Judith Chen’s actions in telling her husband about the settlement breach her fiduciary duty?
Who actually obtained a personal benefit from the tip and how?
Your initial response should be a minimum of 200 words.
Reference
Prenkert, J.D., Barnes, A.J., Perry, J.E., Haugh, T, & Stemler, A.R. (2022). Business law: The ethical, global, and digital environment (18th ed.). Retrieved from https://www.vitalsource.com
Review the Insider Trading (Links to an external site.) video.
Review the summary of United States v. Newman, 773 F.3d 438 (2d Cir. 2014) in Chapter 45 of the course textbook.
Answer preview to assume Ken Hastings (cookout host) and Tim Daniels (Ken’s tennis partner) both bought stock in New World Industries as soon as the market opened
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