! Required information Securities Regulation The underlying principle behind all securities regulation is protection of the investor. Through the protection of investors, securities regulation promotes public confidence in the integrity of the securities market. Most securities regulation centers on disclosure requirements and focuses on whether the seller or issuer has been truthful and transparent during the transaction. Although securities regulation is primarily a matter of federal law, all states have similar disclosure statutes for purely interstate transactions. Read the case below and answer the questions that follow. Suppose that Precision Instrument (PI) is a publicly held company that manufactures and distributes specialized surgical equipment for medical practices and hospitals. Cooper is the company's chief marketing officer, and McDowell is on the board of directors. Although the company struggled after going public, Pl's engineers had created an instrument that the company claimed was groundbreaking. However, PI had to obtain regulatory approval from federal authorities before it could sell the product for medical use. In late July, Cooper learned that the new instrument did not meet regulatory standards for medical use and that federal authorities would be announcing that PI's application was rejected. At the end of last year, Cooper and McDowell each owned 50,000 shares of Pl. The following transactions occurred this year: Jan 1, Cooper purchased 50,000 shares at $100/share. Feb 1, McDowell purchased 25,000 shares at $150/share. May 1, McDowell sold 25,000 shares at $200/share. Aug 1, Cooper sold 90,000 shares at $200/share. Aug 5, PI's stock price dropped to $10 per share. What is Cooper's liability under 10(b)(5) of the Securities Act of 1934 (the '34 Act)?