Question

Jackie called her husband, Sam, from the office. "Sam, I have terrible news. It looks like my bosses are closing a deal for us to be bought and I might lose my job." Sam gets off the phone with Jackie and calls his father to let him know they might need a loan to make it through. He mentions the expected sale of Jackie's company to his father and suggests that he might want to pick up some shares. Sam's father hangs up and calls his broker to buy shares in the company acquiring Jackie's company. Sam has ________.

Answer 1

Sam's action of informing his father about the potential sale, which his father used to buy shares in the acquiring company, could constitute insider trading, which is illegal.

Step-by-step explanation:

Jackie called her husband, Sam, from the office, sharing her concerns about her job due to her bosses closing a deal for the company to be bought. Upon hearing the news, Sam informed his father about the potential acquisition, leading his father to buy shares in the acquiring company. Under securities law, this could be characterized as insider trading, which is illegal. Insider trading occurs when a person makes an investment decision based on non-public, material information.