Answered

Discover the answers you need at Westonci.ca, where experts provide clear and concise information on various topics. Connect with professionals on our platform to receive accurate answers to your questions quickly and efficiently. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.

David Gain is the chief executive officer (CEo) of Forest Media Corp., which is interested in acquiring RS Communications, Inc. To initiate negotiations, Gain meets with RS's CEo, Gill Raz, on Friday, July 12. Two days later, Gain phones his brother, Mark, who buys 3,800 shares of RS stock on the following Monday. Mark discusses the deal with their father, Jordan, who buys 20,000 RS shares on Thursday. on July 25, the day before the RS bid is due, Gain phones his parents' home, and Mark buys another 3,200 RS shares. over the next few days, Gain periodically phones Mark and Jordan, both of whom continued to buy RS shares. on August 5, RS refuses Forest's bid and announces that it is merging with another company. The price of RS stock rises thirty percent, increasing the value of Mark's and Jordan's shares by nearly $660,000 and $400,000, respectively.

Required:
a. Is Gain guilty of insider trading?
b. Could a court hold Gain liable? Why or why not?

Sagot :

Parrain

Based on the scenario described and the actions of those related to Gain:

  • a. Gain is indeed guilty of insider trading
  • b. A court could indeed hold Gain liable

Insider trading:

  • Occurs when one buys shares because they know something that the rest of the public does not
  • Allows such traders to gain great profits or avoid huge losses

When a company is to be acquired, its shares generally rise in price. Gain must have told his brother that he was trying to acquire RS Communications which was why both his brother and father purchased those shares.

In conclusion, Gain engaged in insider trading because his brother and father bought RS shares knowing they would rise as a result of the confidential information Gain shared with them and a court would hold him liable for this.

Find out more on insider trading at https://brainly.com/question/15848966.

Thank you for trusting us with your questions. We're here to help you find accurate answers quickly and efficiently. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Thank you for choosing Westonci.ca as your information source. We look forward to your next visit.