Dhani & Associates, CPA, an accounting firm hired by Eureka, Inc., for an audit, learns of undisclosed company plans to marketa new laptop. Dhani buys 1,000 shares of Eureka stock. He reveals the company plans to Fay, who buys 500 shares. Fay tellsGeoff, who tells Hu. Both Geoff and Hu buy 100 shares. Only Geoff knows that Fay got her information from Dhani. WhenEureka publicly announces its new laptop, Dhani, Fay, Geoff, and Hu sell their stock for a profit. Under Section 10(b) of theSecurities Exchange Act of 1934, Hu is most likelyO not liable because Hu is only a tippee, not a tipper.Onot liable because Hu does not know the source of the information.O liable for insider trading as a remote tipee.O not liable because Hu traded on the basis of a true fact. During the course of the agency relationship, all the knowledge that the agent learns is imputed to the principle under the dutyofdual agencyconfidentiality.O notification.O loyaltyO accountability.

Insider trading liability refers to the legal responsibility and potential consequences that…

Answered: Dhani & Associates, CPA, an accounting…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter11: Property Dispositions

Section: Chapter Questions

Problem 92DC

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