I have a question regarding inside Trading in Corporation

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.III cricket LTE 7:35 AM Cl} 'i' >3 77% [E]! law.taftu.edu 1. MidAmerican Bank operates branches in eight local counties. It is a conservative institution that has earned the loyalty of the local farm populace over the years. Approximately 35 individuals own MidAmerican shares. Old time director W.C. Fields, contacts the children of the deceased founder of MidAmerican. The children, Barbara and Lynn Menke, are married with young families. Fields offers the Menke daughters $12 per share for their father's stock, 20 percent of the total outstanding, which they inherited. Later, he bids against himself, raising the price to $15. Each Menke daughter then sells, grossing over $200,000 each. Two months later, Floatman's Bank, a bigger out of state bank, makes a friendly tender offer (or takeover bid - the terms are used interchangeably) for MidAmerican shares at $30 per share. Barbara and Lynn have learned that Fields went around to several of the shareholders buying up other shares at $12 and at $15. Barbara and her sister feel abused. They are in your office. What course of action should the sisters pursue? A. Afederal claim for insider trading pursuant to SEC Rule fob-5 and the Securities Exchange Act of 1934. .III cricket LTE 7:36 AM G? 'i' >3 77% [E]! law.taftu.edu What course of action should the sisters pursue? A. Afederal claim for insider trading pursuant to SEC Rule lob-5 and the Securities Exchange Act of 1934. B. A state law claim of breach of fiduciary duty under the "special facts" doctrine. 0. Answers (A) and (B) are equally advisable. D. A state law fraud claim. 2. For the last seven or eight years, employees of Good News Gas Co. have been prospecting for natural gas deposits in north central Wyoming's Powder River basin. They drill a test well on one of their leases. The well comes in "gang busters," sending a strong signal that the Good News may be the largest natural gas field ever discovered in North America. The employees quickly cap the well and remove the drilling rig. Knowing also that natural gas prices are approaching an all time high, two employees, Cal Twitty and Jack Owens, drive to a nearby roadhouse with a pay telephone (cellular calls can be traced). They telephone several Stockbrokers each, placing large (but not overly large and therefore suspicious) orders both for Good News common shares and for call options to purchase such shares. .III cricket LTE 7:36 AM Cl} '5' >3 77% [E]! law.taftu.edu Cal and Jack then call Good News headquarters in Denver. They report to Vice President for Development, Marty Robbins, who tells Cal and Jack to keep it under their hat for a few days. He then buys up shares and options on shares. Finally, the "good news" is announced at a press conference. Director Ferlin Husky, who is in attendance, whips out his cell phone. He purchases Good News shares, as does his broker. Within a month the share price has gone from $14 to $40. Who is liable and for what? A. They all are liable for the profit made and, in addition, for a civil penalty for up to three times the profit made (or the loss forgone, in cases of insiders selling on negative news) (Insider Trading Sanctions Act of 1984) and possible criminal penalties. B. Ferlin would not be liable. He did not trade {or "tip" his broker to trade) until after the information was disclosed. 0. Only Marty Robbins is liable. He is a corporate officer. Cal and Jack are just petroleum engineers, rank-and-file employees who owe no one fiduciary or similar duties. D. None of them are liable. This kind of trading keeps share markets efficient, moving share prices in the right