Peter Sanders, a member of the Board of Directors of WheatGrowers Corporation (WGC), was getting his shoes shined on hislunch break and reading the daily newspaper. Two men sitting to hisright were discussing a business deal. At one point one of the mentold the other, \"I think this year's corn supply is going to bevery small due to the cold winter we just had. Plus, I know someother info that no one else knows. If I were you, I would buy asmany shares of Corn Supply of America (CSA) as I could get.\" Theother man replied, \"Thanks for the tip. I'll go and do just that.\"At that time, both men left the area. Peter heard all theirstatements. After getting his shoes shined, Peter left to return towork at WGC.
In the afternoon, he got a phone call from a manager at ButterIs Good (BIG), a company that makes and sells butter. The BIGmanager wanted to order 800 bushels of wheat at $2 per bushel. Themanager asked Peter, \"Does that sound good to you?\" Petersresponded, \"Most likely. Write a check and then send it to me.\" TheBIG Manager agreed and hung up the phone.
Before leaving work that day, Peter went online and bought 2,000shares of CSA stock at $10 per share through his stockbroker. Thenext day, the shares went up to $15 per share in the morning. Thesame day, in the afternoon, WGC and CSA announced a joint ventureand business deal to supply each other with all necessary wheat andcorn. None of the information about the joint venture or deal waspublic knowledge. Both companies had been discussing this jointventure and deal for more than three months. The Board of Directorsof WGC had approved the deal two months prior to the announcement.At the end of the day, the shares of CSA were selling at $30 pershare.
- Do BIG and WGC have a contract for the bushels of wheat? Why orwhy not? Analyze all issues.
- Is Peter liable for any criminal activity because he bought2,000 shares of CSA stock? Why or why not? Analyze all issues.
- Is Peter liable to his company, WGC, in any capacity? Why orwhy not? Analyze all issues.
- Suppose Peter is charged with a crime in federal court. At hisarraignment the judge sets his bail at $100 million, orders a jurytrial, and does not allow Peter to retain an attorney in any futurecourt proceeding. What can Peter argue to the court? Discuss allrelevant issues.
