SIE practice questionmediumSEC Rules
A company executive tells a friend confidential information about a pending merger, and the friend buys company stock before the news is public. Who is liable for insider trading violations?
- AOnly the executive
- BOnly the friend
- CBoth the executive and the friend✓ Correct answer
- DNeither party
Explanation
Why C — Both the executive and the friend
Both the tipper (executive) and the tippee (friend) are liable if the tippee trades on the material, non-public information. Merely giving or acting on a tip is sufficient for SEC enforcement.
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