Keith Loeb and his wife own stock in Waldbaum, Inc., a publicly traded company in the

supermarket business. Robert Chestman is Loeb's stockbroker. Chestman is aware that

Loeb's wife is the granddaughter of Julia Waldbaum, a member of the board of dierctors

of Waldbaum and the wife of its founder. Julia is also the mother of Ira Waldbaum, the

president and controlling shareholder of Waldbaum. During a four-year perios,

Chestman executed several transactions involving Waldbaum's stock for Keith Loeb.

Subsequently, Ira Waldbaum agreed to sell Waldbaum to a buyer which would result in

a stock purchase agreement selling the Waldbaum shares for $50 per share. Ire told

three of his children about the pending sale and admonished them to keep the news

quiet until a public announcement. He alos told his sister, Shirley Witkin, about the sale

and cautioned her not to discuss it because it was to remain confidential. Ignoring that

advice, Shirley told her daughter, Susan, that Ira was selling the company. Shirley

warned her daughter not to tell anyone except her husband, Keith Loeb, because

disclosure could ruin the sale. The next day Susan told Keith about the pending sale,

but told him not to tell anyone.

The following day, Keith Loeb says he talked with Chestman and told him that

Waldbaum was about to be sold at a substantially higher price than its market value.

Loeb asked Chestman what he thought he should do, and Chestman responded that he

could not tell Loeb what to do in a situation like this. After the phone call, Chestman

bought 3,000 shares of Walbaum at $24.65 per share and purchased an additional 8,000

shares for his clients with 1,000 of those shares going to Keith Loeb.

Did Keith Loeb act ethically with regard to what he told Chestman Did Robert

Chestman act ethically with regard to the information he receiver from Loeb? Pick

one of the ethical standards offered in the text and show how that standard applies

to this situation.