Roger and Gordon are middle managers at a large, publicly traded corporation. Roger tells Gordon...

Question

Roger and Gordon are middle managers at a large, publicly traded corporation. Roger tells Gordon that the company is about to sign an exclusive product distribution agreement with a small, publicly traded manufacturer. This contract will quadruple the manufacturer's revenue.
Roger mentions to Gordon that the manufacturer's stock price will likely go ''through the roof. ''Gordon says, ''Maybe we should buy some stock or, better yet, some call options.''

Required:
1. Are Roger and Gordon being smart, being unethical but not breaking the law, or breaking the law?
2. How does the SEC monitor such activity?

David · Accepted Answer

Roger and Gordon are middle managers at a large, publicly traded Corporation. Roger 
tells Gordon that the company is about to sign an exclusive product distribution 
agreement with a small, publicly traded manufacturer. This contract will quadruple the 
manufacturer's revenue. Roger mentions to Gordon that the manufacturer's stock price 
will likely go ''through the roof. ''Gordon says, ''Maybe we should buy some stock or,

Roger and Gordon are middle managers at a large, publicly traded corporation. Roger tells Gordon that the company is about to sign an exclusive product distribution agreement with a small, publicly...

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