Michelle Wie is the president of Microhard Corporation, a major technology firm in New York City. She lives at 1331 2^nd Ave. in New York City. A letter was sent to Wie from Sergio Garcia, the President of Pewlitt Hackard Company, discussing the upcoming merger of Pewlitt Hackard with Microhard. Unfortunately, the letter was delivered to 1331 2^nd St. in New Yori City, the home of Brad and Angelica Pitts. Angelica works as an analyst at Microhard in its finance department. Angelica is not assigned to work on the Pewlitt/Microhard transaction. The letter is stamped Confidential. To be Opened by Addressee Only!!! Angelica opens the letter anyway and learns of the merger. She discusses the merger with her husband Brad, warning him that the information is confidential. Brad does not buy any stock but tells his brother in law Leonardo DeCapto that there is going to be a merger between the two companies. Leonardo buys 10,000 shares of Microhard stock at $10 per share. When the merger is announced two weeks later, Microhards stock goes up to $20 per share. The Securities and Exchange Commission (SEC) is investigating transactions in Microhard and Pewlitt Hackard stock that occurred prior to the announcement of the merger. The SEC wants to bring an action against Leonardo DeCapto. What should the result of the action be?

Group of answer choices

The SEC would be unsuccessful in its action against DeCapto because a tippee's liability derives from the tipper's breach of fiduciary duty, and Brad committed no breach of fiduciary duty

The SEC would be unsuccessful in its action against DeCapto because Angelica breached her fiduciary duties to Microhard by disclosing the merger to Brad, so she should be sued by the SEC, not Leonard DeCapto

The SEC would be successful in its action against DeCapto because he was a tippee and therefore is liable for insider trading under the Securities Exchange Act of 1934

The SEC would be successful in its action against DeCapto because Angelica breached her fiduciary duty to Microhard so DeCapto is liable for insider trading under the Securities Exchange Act of 1934.