Question

Marco is the Treasurer of Dawn, Inc. At a staff meeting, he learned that the company has a new medication for treatment for asthma and it will be announcing it the next day. That afternoon, Marco tells his wife to buy 15,000 shares of Dawn at $10/each on line. The next day, after the announcement, the stock jumps to $22/share. What law has Marco violated?

Answer 1

Here we see Marco holds a crucial position in the company and he is to keep the companys secrets to his family members. It is also adviced and is to maintain secrecy. No employees are allowed to share confidential things or discuss confidential things to family. This is the reason why most of the company follow Anti- napotism ie; they dont allow family members to be allowed in same company or even share the same departments.

Here Marco in a sense has violated this Anti - napotism law as well as became part of insider trading. Ofcourse , family is trusted members but if this turns out to be for danger this hampers the company. Mr. Marco must truly understand this violation can cause him greater liabilities.There is also a risk liability for sharing such informations.Such Tipping case results in being handed to criminal authorities. Section 20 A of Securities Exchange Act of 1934 clearly states this. According to this act the person directly or indirectly involved can be punishable. Also minor cases like sharing of trading profits are considered misleading ones.

Hence forth , one must avoid such malpractices or fraud trading. Mr marco must see to it that he doesnt do such acts in future and if caught with strong valid evidences SEC can charge a huge liability on him.