Question

Cosmetic Profits. Sally is the executive vice president of Big Name Cosmetics Company. Through important and material, nonpublic information, she learns that the company is soon going to purchase a smaller chain of stores. It is expected that stock in Big Name Cosmetics will rise dramatically at that point. Sally immediately buys a number of shares of her company's stock. She also tells her friend Alice about the expected purchase of stores. Alice wanted to purchase stock in the company but lacked the funds with which to do so. Although she did not have the funds in Bank A, Alice decided to draw a check on Bank A and deposit the check in Bank B and then proceed to write a check on Bank B to cover the purchase of the stock. She hoped that she would have sufficient funds to deposit before the check was presented for payment. Of which offense is Sally guilty, if any, in purchasing stock of her company?

Answer 1

Answer:

Insider Trading

Explanation:

Insider trading is an illegal act which is performed by an individual on the bases of confidential information. Any information which is not for public use and is used for personal benefit is an offense which is committed by Sally.

She leaked the information to Alice who further used that information to her own personal benefit which is straight off an illegal act falling in the category of insider trading.