A subsidiary of X Enterprise is registered with the London Stock Exchange and ot

Question

A subsidiary of X Enterprise is registered with the London Stock Exchange and other subsidiary with the New york stock exchange.X Enterprise is an energy company that has planned on heavily investing in two simultaneous untested photovoltaic projects in a weeks’ time through its subsidiaries in the UK and US. Dr. Y is a technical consultant for both project and holds 5% share of both subsidiaries. The CEO of X Enterprise shares the date when the projects would be made public with Dr. Y, The day prior to this Dr. Y sells all of the his shares in the two subsidiaries and the day the two projects are declared, the price of the each share droops by 0.5%in the New York stock Exchange and 0.0001% in the London Stock Exchange.the securities regulatory agencies in both the US and UK seek to prosecute Dr. Y on receiving a complaint from the CEO of X Enterprise. Do you think Dr. Y would be held liable for insider trading? Discuss

subhect is Business Law

Explanation / Answer

In this case Dr. Y would be held liable for insider trading because Dr. Y who is a technical consultant in the organization for both the project was aware of the date the project was about to be made public and he was involved in the selling of the shares before the project was public which is a violation and is considered as insider trading as it depends on the time when the deal is made and as already conveyed, the deal is made before the information is made public. Again, Dr. Y also had access to information which was non public and in this case he is not entitled to deal with securities of the organization, which is again a violation.

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