Dr$.$ Kosinski was hired to do tests on a new experimental drug. When he realized the drug would have problems and not be allowed, he sold stock in the company that makes the drug. He was convicted of insider trading on the stock. The appeals court held that he:

could not be convicted as the trade was for a good "market reason."

could not be convicted as he was not an employee of the drug company.

could be convicted for misappropriation of confidential information.

could not be convicted as the trade "did no material harm" to the market for the stock.