SEC charges accountant and CEO with fraud The tip-off was made ahead of public announcements about a scheme that the U.S. regulator alleged generated profits of more than $6.2m(5m) and was uncovered by the analysis and technology used to detect suspicious trading activity. The U.S. Securities and Exchange Commission (SEC) said Marthin Bustos Lux, formerly an accountant at Ilmina (a well-known listed company) and a certified public accountant, and a close friend Donald Blakstad, engaged in a scheme to trade based on confidential revenue information in exchange for allexpense paid travel and other expensive gifts. Lux allegedly tipped Blakstad in advance of four quarterly Ilmina financial performance announcements from April 2016 to July 2018. Based on the inside information, Blakstad allegedly purchased Ilmina securities using accounts held by business associates and acquaintances to conceal his involvement According to the SEC, Blakstad personally gained around $4m from the illicit trading and tipped at least four other friends and business associates who made $2.2m. Besides, Lux and Ilmina's former CEO, Jackie, have been charged over false financial disclosures that omitted more than $140 million in total debts. Jackie and Lux also "crafted various ways to structure payment of the undisclosed compensation after Jackie's retirement, such as entering into secret contracts, and changing the calculation of Jackie's allowance to provide more than $50 million in additional benefits," the SEC said in a statement. Meanwhile, Jackie has been charged with living a lavish lifestyle using hidden personal loans that he received from contractors and few investors. He did not disclose any of the loans to the company or its investors. He secured $33 million in personal loans from vendors in exchange for business contracts. Jackie also allegedly charged over $10 million to his corporate credit card for items that were personal in nature. For example, he charged $5 million for a new yacht, $1.6 million for a shopping spree, $900,000 for first-class travel for his own family, \$1 million for his own birthday party, $50,000 for a charitable donation to his daughter's private school, and $40,000 in personal legal fees. The charges were all paid by the company. Required: a. In this case, critically discuss the fundamental principle(s) that Lux has not complied with as an Accountant. (IO marks) b. In your opinion, what are the reasons for Lux's behaviour? Justify your answer. (I0 marks) c. Justify the theory that illuminates Jackie's behaviour