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1934 Securities and Exchange Act

Robert was the president of JKL, Inc. JKL intended to purchase Target Co. JKL's intent was not public information, and when it became public, Target's stock would increase significantly in value. Robert individually bought 1,000 shares of Target Co. Ten months later, when the merger was publicly announced, Robert sold Target's stock and made a large profit. Assuming that Robert is guilty of a violation under the 1934 Securities and Exchange Act, what are the possible consequences?

a. The government could charge Robert with criminal violations, leading to fines and/or imprisonment
b. The persons who sold Robert the stock could sue Robert for damages
c. The persons who sold Robert the stock could rescind the sale and recover their stock.
d. A,B a and C
e. B and C only

Solution Preview

The answer is d, A, B, and C.

The reason is the SEC Act of 1934, Section 9e says, "Any person who willfully participates in any act or ...

Solution Summary

This solution identifies the correct answer with regard to the possible consequences of the violation under the 1934 Securities and Exchange Act and explains why.

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