Bob Smith is a patent attorney representing New Drug Company ("New Drug"). Bob's role involves actively engaging with the US Patent and Trademark Office to promote new drug patents through the complex US patent system. In addition to his work as a patent attorney, Bob is also the father of nine children. Bob is well compensated, but he could always use additional funds to help support his family.

Bob has an extensive discussion with a patent examiner, after which the patent examiner decides to issue the latest new drug patent. This patent is for an extremely promising drug for the treatment of pancreatic cancer, and the issuance of this patent will lead to a massive increase in New Drug's stock price. The patent examiner informs Bob of this broadcast by phone and follows up with a written public notice.

All communications between patent attorneys and the United States Patent and Trademark Office are publicly available; however, the Office's online document system stops working shortly after the examiner publicly publishes the issuance of the patent. The document system is offline for approximately 24 hours.

Bob recognizes the value of this patent issuance and decides to use his life savings to purchase New Drug stock immediately upon receiving the good news from the examiner. Bob calls his stockbroker and asks her to buy New Drug stock the next day (ie, once the patent issue should have been made public). Based on the above facts, the document system went down shortly after the patent issuance was published and no one in the public was able to access that information for 24 hours.

 Answer the following:

1. Explain insider trading laws.
2. In light of insider trading laws (see the Stock Exchange Act of 1934), discuss the legality of Bob's situation.
3. Discuss the ethical implications of Bob's actions.