Frank is a retired Marine gunnery sergeant who owns 9 percent of a corporation's stock. After...

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Frank is a retired Marine gunnery sergeant who owns 9 percent of a corporation's stock. After his Marine Corps retirement ceremony, Frank moved to the Madagascar coast, resolved there to live off his stock dividends and his military pension. Frank is completely off the grid. He has no internet connection and no cell phone; he simply reads comic books on the beach with his young mistress at his side and his small dog at his feet. On January 1, Frank uses his satellite phone to call his Chicago based broker and purchases 1,000 additional shares of the corporation's stock. On April 10, Frank again calls his broker on his satellite phone and orders him to sell the 1,000 shares of the corporation's stock that he purchased on January 1. On May 1, the corporation's stock price tanks following news that the company is being sued by the federal government. The corporation folds on May 15. All shareholders are wiped out. By selling when he did, Frank saves $440,000. Frank had no inside information about the federal lawsuit when he sold the 1,000 shares. Was his sale of those shares legal? Why or why not? Frank is a retired Marine gunnery sergeant who owns 9 percent of a corporation's stock. After his Marine Corps retirement ceremony, Frank moved to the Madagascar coast, resolved there to live off his stock dividends and his military pension. Frank is completely off the grid. He has no internet connection and no cell phone; he simply reads comic books on the beach with his young mistress at his side and his small dog at his feet. On January 1, Frank uses his satellite phone to call his Chicago based broker and purchases 1,000 additional shares of the corporation's stock. On April 10, Frank again calls his broker on his satellite phone and orders him to sell the 1,000 shares of the corporation's stock that he purchased on January 1. On May 1, the corporation's stock price tanks following news that the company is being sued by the federal government. The corporation folds on May 15. All shareholders are wiped out. By selling when he did, Frank saves $440,000. Frank had no inside information about the federal lawsuit when he sold the 1,000 shares. Was his sale of those shares legal? Why or why not?

Answer rating: 100% (QA)

Franks sale of shares was legal Because he was not in touch with any insi... View the full answer