Here Is Another Example

Multiple Choice

Here is another example. The president of a publicly owned company that is developing a new cancer fighting drug learns from a friend who works for the Food and Drug Administration (FDA) that the FDA is planning to announce in a few weeks that it not going to approve the company's new drug. Because the company's profitability will be hurt when the FDA announces its decision, he tells his stockbroker to sell some of the stock that he owns in his company before the FDA announces its decision. Is this illegal? If so, what type of crime is it?

A) No, it is not a crime, because owners of companies are free to buy and sell stock in their own companies
B) Yes, it is illegal and is an example of a restrictive trade agreement
C) Yes, it is illegal and is an example of insider trading
D) Yes, it is illegal and is an example of consumer fraud