35. Rita serves on the board of XYZ Corporation, a Delaware corporation that is the business of selling gluten free baked goods to grocery retailers. Recently, Rita was approached by Sam, the owner of a small, artisanal gluten-free bakery, about whether she would be interested in buying him out. Rita likes Sam's business and believes her expertise would allow her to expand the business and increase its profitability.

Can Rita purchase Sam's business consistent with her fiduciary duties to XYZ? Choose the BEST answer.

a. No. The purchase of the bakery would be a conflicting interest transaction and would constitute a breach of Rita's duty of loyalty to XYZ.

b. No. A decision to purchase of the bakery based on just a single conversation with Sam, would constitute a breach of Rita's duty of care.

c. No. The purchase of the bakery would demonstrate a lack of good faith and fair dealing on Rita's part.

d. Yes, as long as Rita presents the opportunity to XYZ's board of directors and a majority of the disinterested and independent board members vote to not take the opportunity.

36. Dewey, a partner the law firm of DCW PLLC, represents Industrial Concepts, Inc., a publicly-traded company. In connection with his representation of Industrial Concepts, Dewey became aware that the company was in negotiations to be acquired by a competitor. At meeting, Dewey reported on the transaction to his law partners, including Howe. Later that night, over dinner, Howe mentioned to her boyfriend, Sulley, that Industrial Concepts was about to be acquired. The next day, Sulley purchased 1,000 shares of Industrial Concepts stock. The SEC subsequently investigates Sulley's share purchase. What is the most likely result?

a. Dewey and Howe will be convicted of insider trading as tippers and Sulley will be convicted of insider trading as a tippee.

b. Sulley will be convicted of insider trading as a tippee; Dewey and Howe will not be convicted of insider trading.

c. No one will be convicted of insider trading on these facts.

d. Howe will be convicted of insider trading as a tipper and Sulley will be convicted of insider trading as

a tippee.e. Dewey will be disbarred for disclosing the confidential information to her partners at DCH PLLC;

Howe will be convicted of insider trading as a tipper and Sulley will not be convicted of insider trading because he was an "innocent tippee."

37. 3 months ago, Abby purchased shares of common stock of MDL, Inc. in an offering exempt from registration pursuant to Rule 506 under the Securities Act of 1933. She now would like to sell those shares to Tad, her best friend, who happens also to be a wealthy venture capitalist. What resale exemption can Abby rely upon to avoid being deemed to be an "undewriter" and having to register the resale with the SEC?

a. Rule 144

b. Section 4(a)(2) of the Securities Act

c. Rule 506

d. The so-called "4(a)(1-1/2)" exemption

e. Section 4(a)(1) of the Securities Act