Please help answer the following question. Provide at least 100 words in the solution.
Martha Mart owned stock in Napkin Inc., a company that she is also a director of. During a board meeting, she was informed that a new product that was to be launched by Napkin was not approved by the FDA. Knowing that once this information became public knowledge the stock would tank, she instructed her stockbroker to sell all her Napkin shares. At the time of her sale, Napkin was trading at $60. After the information about the denial of approval for the new product was reported by CNN, the share price fell to $1.50. Was Martha's action legal? Was it ethical? Why or why not? Who did her actions affect and how?© BrainMass Inc. brainmass.com June 3, 2020, 10:49 pm ad1c9bdddf
The action of Martha was illegal as well as unethical. This act is known as insider trading. Martha misused or took advantage of company's insider information to ...
This solution helps answer questions about insider trading in the context of business ethics. The explanation is given in 114 words.