Author Question: Rod Webster is a licensed real estate agent. The state licensing board has discovered that Rod ... (Read 136 times)

jwb375 · **on:** Jun 24, 2018

Rod Webster is a licensed real estate agent. The state licensing board has discovered that Rod embezzled earnest money deposits over the past three years. The state agency, as an appropriate remedy:
A) May revoke Rod's license.
B) May prosecute Rod criminally.
C) Has the authority only to levy fines.
D) Can censure Rod, but has no authority to revoke his license.

Question 2

Taylor, a securities lawyer for a major Wall Street law firm, worked on numerous successful takeover bids of companies listed on the New York Stock Exchange. Prior to the public announcement of the takeover bids, Taylor provided information to Rogers (his stockbroker) and to Price (his mistress) about certain planned takeover bids on which he had provided legal services. Rogers, who was aware of the relationship between Taylor and Price, made purchases of the target companies on Rogers' and Price's behalf, netting them more than a million dollars in profits each. The SEC brings an action against Taylor, Rogers, and Price under Rule 10b-5 and the Insider Trading Sanctions Act of 1984. Taylor defends that he is an outsider not subject to the 1984 law and Rule 10b-5, and that he received no personal benefit. Rogers and Price defend that they were merely acting on stock market tips received from a person who did not personally benefit from the disclosure. Decide.

mjbamaung · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

A

Answer to Question 2

Taylor is a temporary insider. Taylor breached his fiduciary responsibility to the shareholders by improperly disclosing the planned takeovers to Rogers and Price.
Clearly, Taylor benefited from passing on the information because it provided a significant amount of money to his mistress, Price. Rogers was aware of the relationship between Taylor and Price. Both knew, or should have known, that Taylor was improperly disclosing the information. Triple damages would be appropriate for the severe misconduct in this case.