Case Study: Issue: Insider Trading

Case Study:

For those of you unfamiliar with the F.I.R.A.C Method of coming to conclusions regarding case studies of art law, first the person essential state the occurrence, then the issues, the virtue and finally show how that law applies and conclude on behalf of every side.

Fact:

Jim, Joe and Bob each owned one-third of the shares of Seizen, Inc., a close held companionship. Each as employed by the potty as an officer and director. The corporation was primarily involved in the sure estate development employment although occasionally it took reward of business opportunities in areas unrelated to real estate development.

Bob, in consideration of retirement, requested Jim and Joe to adopt, on behalf of the corporation, a liberal dividend policy and a plan for the corporation to purchase his shares of stock over a period of 10 eld, at a price to be mutually agreed upon. Although Bob had devoted m either years of service to the corporation, Jim and Joe refused to authorize any dividend payments and also refused to purchase any of Bobs shares of stock in the corporation.



Jim and Joes decision was based upon what they considered to be in the best interest of the corporation and also on the fact that Bob had previously taken personal advantage of a real estate development investment opportunity that the corporation had been advised about but was unable to take advantage of because of financial difficulty.

Issue:

Was Bob in violation of rule 10b and 16b?

Rule:

10b- Anybody who is an insider must not trade on the basis of inside or non public information to anyone else who is not possession to.

16b-Prohibits anyone who owns 10% or more of a corporation from trading stock of that corporation within six months of a transaction. (West 433)

Application:...

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