Question

Sally overhears a phone conversation in an elevator of her office building in N.Y.C. discussing top secret financial matters regarding a corporation. After hearing the conversation, she believes she has a strong basis to make a lot of money, so she buys a ton of the company's stock after hearing this inside information. Can Sally be held liable for insider trading?

Answer 1

Answer:

Yes, under the misappropriation theory.  

 

Explanation:

Misappropriation theory is a theory that means when a person acquired the wrong information and use that information for the trading and use that information for their gains. Those people are more liable for insider trading.  

This theory describes the committed securities and uses that information for personal gain or insider trading.

Misappropriation theory and insider trading both are different.  

The misappropriation theory helps the market to prevent insider trading.