Book Title
10th Edition
ISBN: 9781337605656
Author: CROSS
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Question
Chapter 28, Problem 2IS
Summary Introduction
Case summary: Person LE is an officer in a company MOI. LE acknowledged, that the company’s geologist has discovered a new deposit of oil.
To find: The buying of stock by LE after knowing the information.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
You participated in a pump and dump scheme. Later on a representative from the Securities and Exchange Commission contacts you and requests details in respects to a trade of ABCD shares and other info about the account. According to the CFA Ethic Code and Standards: a. You have not violated the integrity of Capital Markets and should disclose the requested information. b. You violated the integrity of Capital Markets and should disclose the requested information. c. you have violated the integrity of Capital Markets and should not disclose the requested information.
Read and analyze the following situation.Bernard J. Ebbers, chief executive officer and founder of the telecommunications giant, WorldCom, owed the corporation $375 million for a loan secured by shares he owned in the company. The value of the company's stock was declining, to the point that the value of its shares was less than the amount of the loan. On February 2, 2002, Mr. Ebbers engaged in a series of communications with leading Wall Street stock analysts, whose opinions helped drive up the stock price, to refute negative news about the company's financial condition. , which was frightening investors. That day, the company's shares increased by 12% in value. Four months later, the company filed for bankruptcy protection due to its precarious economic condition.
Answer the following questions:Are the actions mentioned above illegal? Are they unethical? Support and explain your answer.
What is the difference between an illegal action and an unethical one? Support and explain your…
Suppose you had inside information that your employer was thinking about declaring bankruptcy, and you find out that a family member was about to purchase $20,000 in the stock of your employer. To what extent would it be unethical for you to dissuade the family member from making the investment?
Knowledge Booster
Similar questions
- 1. Exempt from the registration requirement of the Securities Act of 1933 are offerings of securities a. made to a small number of knowledgeable investors. b. issued by for-profit organizations. c. involving a large dollar amount. d. only for large organizations that are for-profit. 2. Global Investments is a foreign investor. With respect to the operations of a limited liability company in the United States, Global can a.not become a member but can participate. b. become a member and participate.c. not become a member or participate. d. Become a member but cannot otherwise participate. 3. Quorum requirements include _________ a. number of decision-makers that must be present before business can be conducted. b. how often decision-makers must meet each year. c. maximum number of shareholders allowed in for-profit companies. d. all other answer choices 4. Fiduciary duties of the directors and officers include a.duty of care b. duty of loyalty c.…arrow_forwardJeremy is considering a corporate recapitalization as a gifting technique and has come to his financial planner for more information. Which of the following statements regarding corporate recapitalization are CORRECT? The stock is recapitalized and divided into nonvoting preferred stock and voting common stock. Jeremy retains control of the corporation through the voting rights associated with his preferred stock. Recapitalization can be used in any corporation. The gift of stock given to the junior family members may qualify for valuation discounts. A) II, III, and IV B) I and III C) II and IV D) I and IIarrow_forwardIdentify and explain any THREE capital market securities withappropriate examples?arrow_forward
- Freida, who lives in Covington, Louisiana purchased three bonds from a company based in Brazil that were yielding 9.75% and paid a 12% coupon, semi-annually. The company went bankrupt and Freida never received her money. What type of risk caused Freida's loss? Interest rate risk. Default risk. Exchange rate risk. Executive risk.arrow_forwardConsidering the following statements true or false. 1.Circumstances whereby the CFA member breaches client confidentiality are acceptable in circumstances directed by the client in writing. 2.Mosaic theory damages the interest of all investors by disrupting the smooth functioning of forward markets and lowering investor confidence. 3.As a philosophical ethical principle, when analysing actions undertaken, it is acceptable that an act can be seen as good or bad regardless of the underlying/relevant circumstances. 4.As part of Standard IV, as a superior, it is not your responsibility to ensure ethical behaviour of your subordinates. 5.Premium investment services should be designed in such a way that, while beneficial to those who are in a position to take advantage of them, they are not unfairly disadvantages to other classes of clients.arrow_forwardThe shareholders of Escalante company are suing the external auditors of the company. The shareholders are upset because the management of Escalante company produced overly positive financial statements and used these financial statements to lure new investors. Escalante company is now bankrupt, the managers are facing prison time, and the external auditors are in monetary damages settlement talks with shareholders of Escalante company. What role could the public company accounting oversight board (PCAOB) have played in avoiding this catastrophe?arrow_forward
- Which ones of the following are primary market transactions? (mark all that applies) ✔ An initial public offering (IPO) of company's securities. Stock ownership transfer from one shareholder to another shareholder Gift of stock from one shareholder to another shareholder Sale of a new share of stock to an individual investor Sale of currently outstanding stock by a dealer to an individual investor Gift of stock by a shareholder to a family memberarrow_forwardDell is among the world leaders for manufacturing PC, mobile, tablets, and other hardware accessories. The company, headquartered in Round Rock, Texas, has about 160,000 employees around the world. The buyout of Dell Computers was completed in October 2013. Michael Dell—the company’s founder and chief executive officer (CEO)—and Silver Lake Partners took the company private for $24.4 billion. The company's shares were delisted from both the Nasdaq and the Hong Kong Stock Exchange before going private. After spending more than five years as a private company, Dell went public again in 2018. The company did so by repurchasing tracking shares in software company VMWare. The deal was worth roughly $24 billion. Michael Dell said he was able to transform the company while it was private. Dell shares began trading on the New York Stock Exchange (NYSE) at $46. As of March 25, 2020, the company's market capitalization was estimated at $28.3 billion. Required Prior to the buyout in October,…arrow_forwardA CEO has placed you in charge of a new investment opportunity to borrow $5 billion dollars to create a new subsidiary of MCI called MillerCare Insurance. Estimates indicate that in seven years, MillerCare Insurance and its assets will be valued at $8 billion. The best offer for the loan sits at 12 percent. Mr. Miller instructed you to provide guidance to the new insurance firm, if indeed you decide to accept the loan package. How might you advise the top management of the insurance firm in regard to: How the Law of Diminishing Returns impacts the insurance market The dangers of Moral hazard Adverse selectionarrow_forward
- Companies A and B differ only in their capital structure. A is financed 30% debt and 70% equity: B is financed 10% debt and 90% equity. The debt of both companies is risk-free. a. Rosencrantz owns 1% of the common stock of A. What other investment package would produce identical cash flow for Rosencrantz? b. Guildenstern owns 2% of common stock of B. What other investment package would produce identical cash flows for Guildenstern?arrow_forwardOutline the ways the Securities Act has sought to fight insider trading.arrow_forwardYour former accounting professor recently contacted you because she knows that you currently work for an accounting firm that performs compilation services for several privately held mining companies. The professor requested data concerning whether your firm’s clients capitalize or expense certain environmental clean-up costs. Your clients discuss their accounting policies openly with you, but do not disclose these policies to outsiders. Your professor has agreed in writing to keep your clients’ accounting policies confidential. Because the professor is a member of the AICPA, and she will not achieve any financial gain, you may disclose the requested information to the professor. Select one: True Falsearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
BUSN 11 Introduction to Business Student EditionBusinessISBN:9781337407137Author:KellyPublisher:Cengage Learning
Essentials of Business Communication (MindTap Cou...BusinessISBN:9781337386494Author:Mary Ellen Guffey, Dana LoewyPublisher:Cengage Learning
Accounting Information Systems (14th Edition)BusinessISBN:9780134474021Author:Marshall B. Romney, Paul J. SteinbartPublisher:PEARSON
International Business: Competing in the Global M...BusinessISBN:9781259929441Author:Charles W. L. Hill Dr, G. Tomas M. HultPublisher:McGraw-Hill Education
BUSN 11 Introduction to Business Student Edition
Business
ISBN:9781337407137
Author:Kelly
Publisher:Cengage Learning
Essentials of Business Communication (MindTap Cou...
Business
ISBN:9781337386494
Author:Mary Ellen Guffey, Dana Loewy
Publisher:Cengage Learning
Accounting Information Systems (14th Edition)
Business
ISBN:9780134474021
Author:Marshall B. Romney, Paul J. Steinbart
Publisher:PEARSON
International Business: Competing in the Global M...
Business
ISBN:9781259929441
Author:Charles W. L. Hill Dr, G. Tomas M. Hult
Publisher:McGraw-Hill Education