Question

Eddie, an accountant for fresh dairy, inc., learns of undisclosed company plans to market a new smooth-tasting, fat-free butter. eddie buys 10,000 shares of fresh dairy stock. he reveals the company plans to giselle, who buys 5,000 shares. giselle tells hong, who tells irwin, each of whom buy 1,000 shares. they know that giselle got her information from eddie. when fresh dairy publicly announces its new product, eddie, giselle, hong, and irwin sell their stock for a profit. refer to fact pattern 42-2a. if eddie is liable under the securities exchange act of 1934, it will be because the information on which he based his purchase of fresh dairy stock was
a. not yet public.

b. not material.

c. a forward-looking forecast.

d. not yet true.

Answer 1

Refer to Fact Pattern 42-2A. If Eddie is liable under the Securities Exchange Act of 1934, it will be because the information on which he based his purchase of Fresh Dairy stock was not yet public.
Section 12 of the Securities Exchange Act of 1934. Section 16(b) of the act covers the short-swing activities of Orbital's insiders.