W5/A3/05
Dracca’s Senior Vice President of Sales, Bob Marley, and one of his sales representatives,...

Question

W5/A3/05
Dracca’s Senior Vice President of Sales, Bob Marley, and one of his sales representatives, Bill Farian, were on a conference call and learned that Dracca’s new line of high chairs was going to be recalled the next day. During the call, Farian stated, “This won’t be good for stock prices.” After the call ended, Marley and Farian immediately contacted their brokers and sold a large portion of their interests in Dracca shares.
Very Good Vinyls (VGV) was a plastic company that periodically purchased used equipment from Dracca’s plant where the new line of high chairs was produced.
	
Document Preview: W5/A3/05Dracca’s Senior Vice President of Sales, Bob Marley, and one of his sales representatives, Bill Farian, were on a conference call and learned that Dracca’s new line of high chairs was going to be recalled the next day. During the call, Farian stated, “This won’t be good for stock prices.” After the call ended, Marley and Farian immediately contacted their brokers and sold a large portion of their interests in Dracca shares.Very Good Vinyls (VGV) was a plastic company that periodically purchased used equipment from Dracca’s plant where the new line of high chairs was produced. In 2009, VGV purchased a 750-ton injection-molding machine from Dracca for $150,000. Because of the good relationship between VGV and Dracca, Dracca extended credit to VGV for the equipment. Last month, VGV sold the injection-molding machine to a small start-up company for $1,500 two days before filing bankruptcy. VGV still owes Dracca $100,000 for the machine.Instructions: In light of these facts, please respond to the following questions. A minimum of one paragraph per question is necessary to adequately address the questions posed. Please submit the paper in APA format, include Introduction paragraph and conclusion, and also cite quotes & references, and use 2-scholarly references, please! Did Marley and Farian commit any securities violations? -Please explain the reasons for your conclusion. -What factors might the court consider in conducting such an analysis? -Would the analysis be different for Marley than Farian? Why or why not?Presuming Farian’s statement “This won’t be good for stock prices” could be considered disclosure of plan to trade on the nonpublic information, would Farian’s sale of stock be a section 10(b) violation? -Would it be ethical? Why or why not?Discuss the legal and ethical issues associated with VGV’s action in selling the molding machine before filing bankruptcy. -What recourse does Dracca have in recovering the monies still owed on the...

David · Accepted Answer

Securities Violations    1 
 
Running Head: SECURITIES VIOLATIONS
Securities Violations
Securities Violations    2 
 
Introduction 
This paper discusses a case that is related to security violation within the organization by 
its two top executives. They committed an action of insider trading. It also considers the actions 
of a company that have a scenario of bankruptcy.   
Commitment of Any Securities Violations: In my opinion, Mr. Marley and Mr. Farian 
have committed any kind of security violation. The main reason behind security violation is their 
insider knowledge about the stock trading. In the opinion of court, the main factor is that they 
may have fear of recalled happen which would impact as a loss of all profit. In addition, they 
have committed the crime due to more power in the company and greed. They have a big 
position in the company, so all other would think that they are working ethically, so they did not 
think about the rules and principles of the trading (US Security and Exchange Commission, 
2013). Along with this, it can also be said that analysis of both of these would be considered in 
the same way. It is because; both of these people broken the rule trading system of the company 
and make fraudulent which comes into the insider trading and mistreatment of customer assets. 
Marley would be analyzed in some critical manner, because he is the Senior Vice President of 
Sales and Farian is his sales representative. The company would treat Marley as a boss of Farian 
to analyze their crime that affected the profit of all the shareholders.  
Section 10(b) Violation:

W5/A3/05 Dracca’s Senior Vice President of Sales, Bob Marley, and one of his sales representatives, Bill Farian, were on a conference call and learned that Dracca’s new line of high chairs was going...

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