Robert Carr is the founder of Heartland Payment Systems, Inc. Carr was heavily involved in negotiations with Global Payments, Inc., concerning the acquisition of Heartland by Global. During this time, Carr’s girlfriend, Katherine Hanratty, frequently expressed her concern regarding her financial security. Carr reassured her by discussing the progress of the negotiations. Later, Carr gave Hanratty a check for \($1\) million and told her to invest \($900,000\) in Heartland shares. Hanratty complied and purchased 11,000 shares of Heartland stock. Soon after, Heartland and Global announced their acquisition deal, causing the value of Heartland’s stock to soar. Hanratty then consulted with Carr about when to sell the stock. Following this conversation, Hanratty sold all her Heartland stock at once, netting her \($250,000\) in profits.

Eventually, the SEC discovered Hanratty’s activity. What do you think the SEC’s charges were? Who do you think was held responsible: Carr, Hanratty, or both? Why?