Milton Brown Is a Business Consultant and Obtained Confidential Information

Essay

Milton Brown is a business consultant and obtained confidential information about a publicly traded corporation which, if made public, would cause the stock to rise dramatically. Milton formed a private corporation with himself as the sole shareholder and director and had that corporation purchase stock in the publicly traded corporation. When the news which Milton was aware of became public the price of the publicly traded shares increased dramatically and the corporation Milton has formed sold its shareholdings at a substantial profit. Milton is subsequently charged with insider trading, that is, using confidential information for his own personal gain. His defense is that the gain was made by his corporation and not by himself and his corporation is a separate legal entity. Will Milton's defense be successful? Give the legal basis for your answer.