The following transactions in Heritage Cosmetics Co., Inc., stock took place: On January 21, Jones, the corporation's vice president of marketing, purchased 1,000 shares of stock at $25 per share. On January 24, Sylvan, a local banker and director of Heritage, purchased 500 shares of stock at $26 per share. On January 30, McCarthy, a secretary at Heritage, purchased 300 shares of stock at $26.50. On February 12, Winfried, a rich investor from New England, purchased 25,000 shares at an average price of $26 per share. At that time, Heritage had a total of 200,000 shares of stock outstanding. On June 14, Winfried sold his entire holding in Heritage at an average price of $35 per share. In a local newspaper interview, Winfried was quoted regarding his reasons for selling the stock: "I have not had the pleasure of meeting any person from Heritage, but I have the highest regard for the Heritage Company, . I sold my stock simply because the market has gone too high and in my view is due for a correction." After independently reading Winfried's prediction on the stock market, Jones, Sylvan, and McCarthy sold their shares on June 15 for $33 per share. On June 20, Heritage Co. demanded that Jones, Sylvan, McCarthy, and Winfried pay the corporation the profits made on the sale of the stock. Was the corporation correct in making such a demand on each of these people?

  • CreatedJune 06, 2014
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