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Question
John was an accountant with the tax firm, Taxes "˜R" Us. A pharmaceutical company, Pharmicon, hired Taxes "˜R" Us to "handle its books." While reviewing paperwork for the firm, John came across documentation about Pharmicon's discovery of a cure for the common cold. The discovery had not been made public. John immediately bought stock in Pharmicon. When the discovery was announced, John made a large profit. The SEC sued John for securities fraud in violation of Rule 10b-5. Based on the decision in Case 41.2, United States v. O"Hagan, the court in this case would most likely rule in favor ofa. John, because he was not an employee of Pharmicon.
b. the SEC, because John breached his fiduciary duty to his firm and the firm's client.
c. John, because he did not breach his fiduciary duty to his firm.
d. the SEC, because John is not allowed to buy stock in any company that is a client of his firm.
Answer
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