1. A person in Mrs. Rocklage’s position is called a tippee. Tippee’s are guilty of insider trading when they pass material non-public information on to others that they received from a tipper, Mr. Rocklage. In this case, Mrs. Rocklage gave information obtained from her husband in confidence to her brother, who used it to save himself money. Why would receiving information, unsolicited, be a criminal act, if her brother did not ask her for it?
2. If the friend of the brother were prosecuted, would it matter if he did not know that the information was not public? Would he still be guilty of insider trading?
3. What is the definition of material? If Mr. Rocklage told his wife that the CEO of Cubist was going to quit, and that information was shared with her brother, would that constitute insider trading? Does the information have to affect the market in order to make it material? Should it?