1.) ReadCase Problem 28-11 on page 611, under the heading "Time-Limited Group Assignment." The issue is whether Svoboda and/or Robles have violated SEC Rule 10b-5.

There is a fact that is not explained on page 611 that is relevant to how you answer these questions. Svoboda discovered that some of the bank's clients were engaged in acquisitions of other companies. Based on that information, he purchased stock in the targeted companies, not the companies that were the bank's clients.

There are two theories that have been developed under which outsiders may be held liable for insider trading. One of those is the misappropriation theory. Explain whether that theory applies to either Svoboda or Robles.

2.) There are two theories that have been developed under which outsiders may be held liable for insider trading. One of those is the tipper/tippee theory. Explain whether this theory applies to either Svoboda or Robles.

3.) Implications: The primary purpose of federal securities regulation is to prevent fraudulent practices in the sale of securities and thereby to foster public confidence in the securities markets. Explain whether knowing that the SEC will bring enforcement actions against people like Svoboda and Robles improves your confidence in the securities market.