Insider Trading Quiz

What is the definition of an insider trader according to Charles C. Cox?

• A person who is a shareholder in a company

• A person who only trades in their own company's stock

• A person who trades securities while in possession of material nonpublic information

• A person who trades publicly available information

Which of the following is NOT a challenge in determining insider trading?

• Establishing if the trade occurred while in possession of material information

• Determining the materiality of information

• Assessing the public's reaction to the trade

• Identifying who is an insider

Why is insider trading considered illegal?

• It is not regulated by any authority

• It leads to equitable treatment of shareholders

• It is a common practice among investors

• It results in abusive self-dealing and erodes investor confidence

Who is classified as a connected person in the context of insider trading?

• Any person who is a shareholder

• Only the company's CEO

• Any person who has been associated with a company in the last 6 months

• Any person who has traded securities in the last year

Which of the following is an example of UPSI?

• Company's financial results

• Public announcements

• Stock market indices

• General market trends

What is the 'Need-to-Know Principle' in insider trading?

• Only insiders can trade securities

• Information can be shared with anyone

• No person shall communicate UPSI unless there is a legitimate purpose

• All information must be made public immediately

What is required for a trading plan to be approved?

• It must be executed immediately

• It must be presented to the compliance officer

• It must be kept secret

• It must be shared with all shareholders

What is the minimum duration a trading plan must cover?

• 24 months

• 6 months

• 3 months

• 12 months

What must the Board of Directors do before sharing UPSI?

• Share it with the media

• Require contracts of confidentiality and non-disclosure

• Ensure it is shared with all employees

• Make it public immediately

What is the role of the compliance officer in relation to trading plans?

• To execute the trades

• To monitor and approve trading plans

• To manage the company's finances

• To inform the media about the trades