Violation of Sec Rule 10-B-5 of the Federal Statue Essay
From: Date: July 11, 2014
Re: Violation of SEC Rule 10-b-5 of the Federal statue
Aquaman is president of a marine research company called "Underwater Leagues, Inc." On April 1, the research director of Underwater Leagues tells Aquaman that they've come up with "Oxygum," a means of breathing underwater by chewing a special kind of gum. Aquaman knows a great product when he hears it.
He delays announcing the invention to the public so that he can buy all the stock he can get his hands on. He buys 50,000 shares of Underwater Leagues, at $10 a share. After the announcement, the share price skyrockets to $50 per share.
a) If the shareholders bring a derivative action against Aquaman, what federal …show more content…
The court in Antar stated “that shareholders of a corporation and those insiders who obtain confidential information by reason of their position with the corporation should have a relationship of trust and confidence and that trading on such information qualifies as a "deceptive device" under § 10(b).” Aquaman is in violation of 17 CFR § 240.10b-5, “Employment of Manipulative and Deceptive Practices,” by scheming, omitting to state a material fact, and committed fraud in connection with the purchase and sale of stocks in his company.
In Antar, and in our case, shareholders of a corporation and those insiders who obtain confidential