Identifying the Facts and Issues

Proctor would be treated as an

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in regard to Eagle and possessed a

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duty to the company.

Assessment question

An individual who receives tips from an insider is known as a

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and is liable for insider trading if the following requirements are met: 1) There is a

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, 2) The disclosure is made

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personal benefit, and 3) The tippee

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of this breach and benefits from it.

Assessment question

When Proctor told his wife about Eagle in the context of arranging childcare, Proctor

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breach his fiduciary duty to the company not to disclose inside information. Proctor's inadvertent disclosure to Hunt

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occur in exchange for personal benefit.

Assessment question

Hunt, the tippee,

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know or should have known there had been a breach by the insider when Hunt overheard the conversation. Given the facts above, Hunt is likely

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of insider trading.

Assessment question

What If the Facts Were Different?

Assume that Proctor and Hunt were close friends, and Proctor told Hunt about the pending liquidation of Eagle in exchange for 50% of the profits that Hunt made from the trade.

In this case, Proctor

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likely be found guilty of insider trading because Proctor

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breach a duty not to disclose inside information. The disclosure

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made for Proctor's personal benefit. Hunt

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likely to be found guilty of insider trading. A court would likely find that Hunt

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the breach of duty by Proctor and also received personal gain.