The SEC prohibits insider trading through the statutory provisions only when the monetary benefit is earned by the insider for himself. The SEC decided to amend the law and the action can be brought even when there is no monetary benefit to insiders. The commission did not follow the procedure of rulemaking and simply announced the law. An objection against the law was brought by a stock brokerage firm on the ground that the rule was made without giving any opportunity for public comments. The rule was ultimately challenged before the federal appellate court. To find: The effect of considering the rule merely as an interpretive rule.

Question

Want to see the full answer?

Answer 1

Question

Chapter 23, Problem 4RE

Summary Introduction

Case summary:The SEC prohibits insider trading through the statutory provisions only when the monetary benefit is earned by the insider for himself. The SEC decided to amend the law and the action can be brought even when there is no monetary benefit to insiders. The commission did not follow the procedure of rulemaking and simply announced the law. An objection against the law was brought by a stock brokerage firm on the ground that the rule was made without giving any opportunity for public comments. The rule was ultimately challenged before the federal appellate court.

To find: The effect of considering the rule merely as an interpretive rule.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

When a corporation wishes to issue certain securities, it must provide sufficient information for an unsophisticated investor to evaluate the financial risk involved. Specifically, the law imposes liability for making a false statement or omission that is "material." What sort of information would an investor consider "material" pursuant to the Securities Exchange Act of 1934? Be sure to explain the Act and provide two recent case examples where material representation or omission amounted to securities fraud in violation of SEC Rule 10b-5.

The Federal Trade Commission (FTC) files suit against Yange Corp. under § 2 of the Sherman Act. To be successful, the FTC must prove that Yange Corp. possesses monopoly power in the relevant market and that the monopoly power was obtained by illegal means. The FTC has no direct evidence that Yange is using its power to control prices and restrict output. The FTC, therefore, must show that Yange Corp. has monopoly power indirectly, by showing that Yange Corp. has a dominant share of the relevant market and that there are significant barriers for new competitors entering that market. The FTC can calculate the market share that Yange Corp. has by: showing the total sales that Yange Corp. has ever had. × showing the net revenue that Yange Corp. had during their year of highest profits. looking at the company's sales compared against the total sales of the industry within a specific period. taking the total sales of the industry over one year, and comparing against industry sales over prior…

The Securities and Exchange Commission today charged Ernst & Young LLP (EY) forcheating by its audit professionals on exams required to obtain and maintain CertifiedPublic Accountant (CPA) licenses, and for withholding evidence of this misconductfrom the SEC’s Enforcement Division during the Division’s investigation of the matter.EY admits the facts underlying the SEC’s charges and agrees to pay a $100 millionpenalty and undertake extensive remedial measures to fix the firm’s ethical issues.“This action involves breaches of trust by gatekeepers within the gatekeeper entrustedto audit many of our Nation’s public companies. It’s simply outrageous that the veryprofessionals responsible for catching cheating by clients cheated on ethics exams ofall things,” said Gurbir S. Grewal, Director of the SEC’s Enforcement Division. “Andit’s equally shocking that Ernst & Young hindered our investigation of this misconduct. This action should serve as a clear message that the SEC will not…