Think Tank

Please reply to the post below

Would registration with the SEC be required for Dakota Gasworks securities? Why or why not? SEC rule states that a company needs to register its securities if it cannot meet an exemption mentioned in the Act, for example, government-issued securities and bank institution securities. Reliant company is taking over Dakota Company, which would result in the transfer of security and stock. Dakota did not publicize the selling of their securities. Therefore, no need for registration with SEC because it was a privatized takeover.

 
Did Emerson violate Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5? Why or why not? SEC rule 10b-5 applies to anyone who buys and sells securities or stock. Emerson did violate Section 10(b) of the Securities Act of 1934, where he deliberately tipped off Wallace of a potential investment. Insider trading can involve friends, brokers, contractors, accountants, or government employees (Miller 276). Emerson is the “insider” who provides information not publicized to Wallace, “outsider” and purchases the stock illegally. 

3. What theory or theories might a court use to hold Wallace liable for insider trading? The Expectancy violation theory can be used by a court to hold Wallace into account. The theory states that deception is perceived from nonverbal behavior that violates nominative expectations (Bond et al. 40). In this case, Wallace used the information during hangout for personal gain. Additionally, the court can examine the history between Wallace and Emerson’s behavioral actions after business dealings or sharing crucial information pieces.

4. Under the Sarbanes-Oxley Act, who would be required to certify the accuracy of the financial statements Reliant filed with the SEC . Sarbanes-Oxley Act of 2002 is a law passed in the US which helps to protect investors from dishonest financial reporting by companies. According to section 18 of the US Code, financial statements filed by the insurer must be accompanied by an acknowledgment from the insurer CEO and CFO.  In this case, Emerson is the chief financial officer and must certify the company financial statement together with the chief executive officer.
Debate:

Insider trading should be legal because it provides minor damage to the market, and laws set to curb the trading could be harmful to the persons involved. For example, someone with access to a potential sale of securities information might accidentally disclose it to a friend. If the friend acts on that information and gets caught, he will be imprisoned. Securities Exchange Act of 1934 states, Insider trading by a company can be legal as long as they disclose their buying or selling the Securities becomes public(“US Exchange Commission”). These laws will lead to the loss of top professionals and end up seeking employment in other countries. Additionally, investors could buy shares and securities at better prices if and improve the targeted corporation.
Works Cited
Bond, Charles F., Omar, A., Lashley, B.R., Skaggs, L.M., & Kirk, C. T “Fishy-Looking Liars: Deception Judgment from Expectancy Violation.” Journal of Personality and Social Psychology vol. 63, no.6, 1992, 969.
Miller, Roger LeRoy. Business Law Today, Comprehensive. Cengage Learning, 2016.
“18 US Code.” 18 US Code §_1350.Failure of Corporate Officers to Certify Financial Reports, n.d., https://www.law.cornell.edu/uscode/text/18/1350 (Links to an external site.). Accessed 21 May. 2021.
US Security Exchange Commission, n.d., www.sec.gov/answers/insider.htm (Links to an external site.). Accessed 21 May. 2021.