SIE practice questionhardSEC Rules - Tipper Liability
A corporate 'tipper' reveals material inside information to a relative, who profits by trading before the news is public. Which party is liable under insider trading laws?
- ANeither is liable if the tipper did not trade
- BOnly the relative who trades
- COnly the company
- DBoth the tipper and the tippee✓ Correct answer
Explanation
Why D — Both the tipper and the tippee
Both parties are liable: the tipper for leaking confidential information, and the tippee for profiting from it. The company may face sanctions, but direct liability falls on the individuals. The tipper is liable even if not trading personally.
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