Question

Susan is the Executive Vice President of Awesome Avionics, Inc., a publicly traded company. As EVP, Susan learns that Awesome Avionics is about to release an aircraft piloting system that will revolutionize the airline industry. Telling him to keep the secret, Susan tells her next door neighbor Peter about the development and suggests that he buy stock in the company. When the product is announced the price of Awesome Avionics stock increases dramatically and Peter sells his stock. Grateful for the information, Peter buys Susan a Rolex watch.

Sam Shady, CPA, prepared financial statements for Awesome Avionics, Inc. From preparing the documents Shady learned that Awesome Avionics would soon release the revolutionary aircraft piloting system. Expecting the price of Awesome Avionics stock to rise sharply, Shady purchased 1,000 shares of Awesome Avionics stock. Three weeks later, Shady sold his Awesome Avionics stock at a profit.

a. Individually, detail the unlawful activity that Susan, Peter and Shady have engaged in.

b. What consequences do Susan, Peter and Shady face?

Answer 1

Sushan is the executive vice president of Awesome Avionics inc a publicly traded company shared the secret information about the company that it will release an aircraft piloting system that will revolutionize the airline industry to his neighbor.Hence the neighbor(peter) purchased the stock of Awesome avionics inc and sold the same at profit after the company announced the new product.

Generally the employees of the any company have a duty of confidentiality and maintain a good faith in relation to the information relating to that company,

The unauthorised disclosure of of confidential information or sharing of company secrets constitutes a beach of the employees duty of confidentiality and can have important consequences

A member in public practice shall not disclose any confidential client information without the specific consent of the client

But in the given case sam shady A certified public accountant prepared financial statements of the Awesome Avionics inc While preparing the financial statements he knows about the company that it will soon release the revolutionary aircraft piloting system and the same will increase the stock price of the company so based on that information he purchased the stock and sold the same at a profit later

but here the certified public accountant doesn't share the information to any one so there is no implications on him.