Business Law Current Event

LaThis article found in the Wall Street Journal applies to insider trading. Thomas Conradt and David Weishaus bought shares of SPSS Inc. after illegally discovering about their near future acquisition of IBM. They believe Conradt was informed by his roommate at the time in 2009. Conradt then informed Weishaus but asked him to keep quiet claiming “we gotta keep this in the family” and “I don’t want to go to jail”. The two men were arrested last Thursday, November 29, 2012. It is believed that Conradt, Weishaus and three other brokers made more than one million dollars from the information. They each face up to twenty years in prison.
I picked this article because of how it relates to this class; insider trading is something we have discussed in past lectures. The Securities Exchange Act of 1934 was put into play to fule over and secure exchanges, brokers, dealers, etc. Within this act, rule number 10(b)-5 was put into play to prevent insider trading. Insider trading meaning purchases or sales occurred based on information that was not yet made public. Under this rule the information which affected the decision to conduct business must result in material to be found guilty of insider trading. Meaning, the business act had to be worth a significant loss or gain by either party involved. The main purpose of this rule was to prevent future forecasts of any business because predictions may affect buying or selling of shares and prediction may be inaccurate. Also both parties in this article are held liable under the misappropriation theory; the theory that holds the parties liable of their actions in these