ESSAY QUESTION- BUSINESS LAW
- Jetco, a corporation whose stock is traded on a national stockexchange, has 200,000 shares of common stock outstanding that is at$20 per share. Dan owns 100 shares of Jetco stock and is a memberof the board of directors of Jetco. Five months ago, Dan learnedthat Jetco has developed a secret new invention to convert organicwaste into commercial jet fuel and that a public announcement wassoon to be made. Dan immediately emailed all three of Jetco’sshareholders whom he knew had previously announced a willingness tosell shares for $2 per share. Dan offered the shareholders $5 pershare. They accepted his offer and sold him 400 shares ofstock. Dan also had been previously given a stockoption allowing him to purchase an additional 1000 shares ofun-issued Jetco stock from the company for $1 per share at somepoint within the next year. He exercised this option and purchasedthe shares for $21 per share from the company.
One week later the news conference is held and Jetco Stockalmost immediately doubles in value. The next day Dan sold his 4200shares and his 1000 shares at $50 per share.
Evaluate Dan’s potential liabilities, both criminal liabilityfor securities law violations and civil liabilities to thecorporation and the other shareholders.
