Series 79 practice questionmediumMNPI and Insider Trading
An investment banking analyst learns about a pending acquisition while working on the deal and shares this information with a friend, who then trades on it. Which of the following best describes the analyst's liability under insider trading laws?
- ANo liability since the analyst did not personally trade.
- BLiability as a tipper if the analyst received a benefit from the friend.✓ Correct answer
- COnly the friend is liable since the analyst did not profit.
- DNo one is liable unless the company discloses the information.
Explanation
Why B — Liability as a tipper if the analyst received a benefit from the friend.
The analyst may be liable as a tipper if they disclosed MNPI and received a benefit, even if not monetary. Tipper liability does not require the tipper to trade personally, making this distinction crucial.
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