Question

Toby is a senior employee of a company. At a meeting with the company's financial advisors, he learns that the company is facing heavy losses and will soon be bankrupt. He shares this information with a friend who owns shares in the company and urges him to sell his shares. This scenario is an example of ________.

A) Insider trading
B) Embezzlement
C) Securities fraud
D) Money laundering

Answer 1

This scenario is an example of insider trading, which is when someone with access to non-public information about a company uses that information to their advantage in buying or selling stocks or other securities.

Step-by-step explanation:

This scenario is an example of insider trading. Insider trading occurs when someone with access to non-public information about a company, such as an employee, uses that information to their advantage in buying or selling stocks or other securities. In this case, Toby, as a senior employee of the company, has insider information about the company's financial situation and is sharing it with his friend in order to manipulate the stock market for personal gain.