INSIDER TRADING

A wealthy businesswoman bought several thousand

shares of a pharmaceutical company that was set to

come out with a groundbreaking new cancer drug. She

was a social friend of the company's CEO. On her way

to vacation in Mexico, she received information from her

broker that the CEO was selling all his shares. She eventually

found out that the Food and Drug Administration

was set to reject the cancer drug. She then sold all her

shares and saved her own portfolio from devastation.

CASE QUESTIONS

1. Is the woman guilty of insider trading? Why?

2. Would you do what she did or just wait around to

lose all your money?

3. Should the CEO get to sell his shares?