ations at AT&T;, tells his business section of the vice president of I good frie

Question

ations at AT&T;, tells his business section of the vice president of I good friend Francine to read the New York Times and then call him back. Within a half hour Francine calls Javier and indicates that the Ti had published an article reporting the possible merger of AT&T; with NCR, another large corporation. Javier replies, "Yes, I read that article, too; and I believe the rumors to be true." Francine then immediately makes a series of purchases of NCR stock. Seven days after the conversation between Javier and Francine, AT&T; and NCR announce the merger. Did javier violate federal securities laws? If so, what law and why? mes

Explanation / Answer

Yes, Javier violated federal securities law.

Securities:

Securities are the investments which are made. These can be in for of shares, bond, loans, mortgages, etc.

Securities Law:

It is the law which is regulatory, transactional and litigation. It has parts of all the three.

Javier gave the inside information to Francine. Though it was published in the newspaper but it was confirmed by Javier. This is against securities Exchange Act of 1934. This can come under insider trading. Therefore Javier violated the law. This might be difficult to prove in to court since the new was published. Francine got a confirmation from a Vice President of the company.

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