Emerson served as the chief financial officer for Reliant Electric Co $($Reliant$),$ a distributor of electricity. Reliant was in the final stages of planning a takeover of Wilder Gasworks, Inc $($Gasworks$),$ a natural gas distributor serving the same area. Emerson went on a weekend fishing trip with his uncle, Wallace. Emerson mentioned to Wallace that he had been putting in a lot of extra hours at the office planning a takeover of Wilder Gasworks. When he returned from the fishing trip, Wallace purchased $$20,000$ worth of Reliant stock. Three weeks later, Reliant made a tender offer to Gasworks stockholders and purchased $57$ percent of Gasworks stock. Over the next two weeks, the price of Reliant stock rose $72$ percent before leveling out. Wallace then sold his Reliant stock for a gross profit of $$14,400.$

Did Emerson violate Section $10($b$)$ of the Securities Exchange Act of $1934$ and SEC Rule $10$b$-5?$ Why or why not?

What theory might a court use to hold Wallace liable for insider trading