Needing help with with questions 1 &2 This is a graded discussion; 20 points pos

Question

Needing help with with questions 1 &2 This is a graded discussion; 20 points possible due Apr 16 Chapter 11.2 Discussion- Martha Stewart: Inside Trader? 23 23 Martha Stewart apparently got an insider tip from her broker on a stock, involving a company with whom she was personal friends of the president. She apparently lied about what transpired before a Securities and Exchange Commission investigation. She, her broker, and the president of the other company all wound up spending time in jail. 1. Is it ethical for a broker to dispense any insider information? To dispense it to favored clients, but not to his company? To disclose it to favored clients but not other clients: 2. To what oxtent is it practical to require that the president/majority shareholder of a company and knows the companý is not doing well will not sell his stock before this news becomes public? Subscribe

Explanation / Answer

a. First and foremost thing, insider trading is not just unethical but also illegal in many countries. Therefore, if broker is going to his/her client like Martha with insider trading information, is totally unethical and illegal. Same will be applicable for favored or unfavored clients.

b. Being a President/majority shareholder, its not very easy to leave the ship if its trapped in the bad weather. Though its practically quite possible for the President to sell his shares before the news goes into the market, but again this will create a big alarm in the market and there wont be many takers for those shares.

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