1. State U football coach Knute Olsen is attending a track meet at a local high school because his daughter is running in the 800-meter race. Coach Olsen sits behind Local Public Company CEO and his spouse. CEO is talking to his spouse about leaving the next day, a Sunday, to travel to New York, where he will be meeting with investment banking firm Silverman Sachs. In the same conversation, CEO talks about mergers and about XYZ Co. Putting two and two together, Coach Olsen calls local auto dealer, who sponsors Coach's television show. On Monday, they purchase 20,000 XYZ shares. Sure enough, on Wednesday, a cash acquisition of XYZ by Local Company is announced. The cash merger price is at a 48 percent premium over market. Coach Olsen and friendly auto dealer sell on Friday. Their one-week profits are a whopping $1.9 million. The SEC sues Coach Olsen and local auto dealer. What is their best defense?
   1. They have none. Coach Olsen is a tippee and local auto dealer is a remote tippee. Both are liable.
   2. Coach is liable but, as a remote tippee, local auto dealer is not liable.
   3. The information is market information rather than inside information so that the "disclose or abstain" prohibition does not apply.
   4. The coach is only an eavesdropper, not a tippee, and therefore neither he nor local auto dealer is liable.