Series 79 practice questionmediumMNPI and Insider Trading
Under the misappropriation theory of insider trading, which of the following individuals could be held liable?
- AOnly insiders of the issuer who trade on MNPI.
- BA lawyer who trades on confidential information obtained from a client deal.✓ Correct answer
- CA company's CFO trading on public information.
- DAny individual trading on rumors from social media.
Explanation
Why B — A lawyer who trades on confidential information obtained from a client deal.
The misappropriation theory holds outsiders, like lawyers, liable if they misuse confidential information for securities trading. This contrasts with limiting liability to only issuer insiders.
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