Consider the following scenario. Bob Smith is a patent attorney that represents New Drug Company ("New Drug"). Bob's role involves actively engaging with the United States Patent and Trademark Office to advance New Drug's patents through the complex United States' patent system. In addition to his job as a patent attorney, Bob is also a father of nine children. Bob is well compensated, but he could always use extra 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 the price of New Drug's stock. The patent examiner informs Bob of this issuance over the phone and follows up with a public written notice.

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

Bob recognizes the value of the issuance of this patent and he decides to use his life savings to buy New Drug stock immediately after he received the good news from the examiner. Bob calls his stockbroker and asks her to buy New Drug stock the next day (i.e., once the issuance of the patent should have gone public). Per the facts above, the document system went down shortly after the issuance of the patent was posted and no one in the public was able to access that information for 24 hours.

Respond to the following:

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

Please provide reference