Pandora Personal Products, has learned that insider information about his
company’s planned acquisition of a smaller manufacturer, Just Tweezers, Inc.,
has been leaked to outsiders. The leak has been traced to his son, who Mike had
told about the merger in confidence. The next day (and weeks before the merger
news becomes public), the price of Pandora stock rises from $15/share to
$21/share and closes the day at $20.25. The official word from the company that
day?
stock exchange?is that there is no news forthcoming and no explanation for the
stock price rise.
? Do you
suppose Mike and may be some trouble or are things OK for now?
? Anybody
else maybe sweating bullets at the moment?
? Explain
what law violations are evident now or might become evident as the days go by.
? Finally,
what strategy should Mike’s company employ now, keeping in mind the laws about
insider trading that you’ve learned about.
