Tom is an engineer for Talbot Tech and has just discovered a revolutionary method for strengthening metals. He knows this knowledge will add value to Talbot Tech's stock. Tom happens to mention this discovery and its value to his neighbor, Fred. Fred can be charged with insider trading if he:
A)continues to hold the Talbot Tech shares of stock he already owns.
B)shares this information with another neighbor.
C)sells his shares in Talbot Tech immediately after the news of the discovery is announced.
D)provides this information to a friend who will trade the stock and split the profits with him.
E)buys shares in Talbot Tech immediately after the news is announced and then shortly thereafter sells the shares at a profit.

Question

Quizplus · Accepted Answer

Fred can be charged with insider trading if he provides the information to a friend who will trade the stock and split the profits with him. This action would give the friend an unfair advantage in the market and would be considered illegal insider trading.

Tom Is an Engineer for Talbot Tech and Has Just