Amiah is an officer of SunnyCorp. Amiah knows that a SunnyCorp. engineer recentl

Question

Amiah is an officer of SunnyCorp. Amiah knows that a SunnyCorp. engineer recently developed a new method for converting solar power into fuel. Amiah takes advantage of this information to buy SunnyCorp. stock from Taylor and, after the information about the new method becomes public, sells the stock to Grace at a profit. Grace also makes a profit after Amiah warns her that the price might drop, and she then sells the stock to her own, former friends. Within a few months, the price of the stock plummets in spite of Amiah’s assurances to the board of directors, the employees, and the community, where 90% of the population works for SunnyCorp. The value of the stock falls, moreover, in spite of the outstanding performance forecasts that SunnyCorp. Has been filing with the SEC. What are the legal issues? Be sure to identify all issues, along with the specific laws, that apply, along with your conclusions and your reasons for reaching the conclusions

Explanation / Answer

In this Amiah has violated the norms and has been involved in Insider Trading when she purchased the stock of SunnyCorp as she was aware that the new method developed for converting solar power into fuel will actually do good and she purchased before the information was made public. She sold the stocks to Grace after the information about the new method has been made public, so in this case transaction is fair because after such information's are made public there is no violation.

Amiah is violating the Securities exchange act of 1934 which prohibits insider trading. Taking advantage of the position and also of the information Amiah had regarding the new method and purchasing stock to make quick profit is a violation and is a punishable offense which may lead to incarceration if this is the second time she is making such a thing.

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