Assume that the Securities and Exchange Commission (SEC) has a rule that it will enforce statutory provisions prohibiting insider trading only when the insiders make monetary profits for themselves. Then the SEC makes a new rule, declaring that it will now bring enforcement actions against individuals for insider trading even if the individuals did not personally profit from the transactions. In making the new rule, the SEC does not conduct a rulemaking procedure but simply announces its decision. A stockbrokerage firm objects that the new rule was unlawfully developed without opportunity for public comment. The brokerage firm challenges the rule in an action that ultimately is reviewed by a federal appellate court. Using the information presented in the chapter, answer the following questions.
Would a court be likely to give Chevron deference to the SEC’s interpretation of the law on insider trading? Why or why not?
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The Legal Environment of Business: Text and Cases (MindTap Course List)
- The Robinson-Patman act a.) Is a part of the antitrust laws O b.) Makes it illegal to give a price discount on a good sold to another business c.) Makes it illegal to give a price discount on a good sold to final customers d.) Both a & barrow_forwardConsidering the following statements true or false. 1.Circumstances whereby the CFA member breaches client confidentiality are acceptable in circumstances directed by the client in writing. 2.Mosaic theory damages the interest of all investors by disrupting the smooth functioning of forward markets and lowering investor confidence. 3.As a philosophical ethical principle, when analysing actions undertaken, it is acceptable that an act can be seen as good or bad regardless of the underlying/relevant circumstances. 4.As part of Standard IV, as a superior, it is not your responsibility to ensure ethical behaviour of your subordinates. 5.Premium investment services should be designed in such a way that, while beneficial to those who are in a position to take advantage of them, they are not unfairly disadvantages to other classes of clients.arrow_forwardDuties and Liabilities of Corporate Directors Discuss the extent to which a director should be held liable for breaching his or her duty of care if he or she simply neglects to read materials regarding issues to be voted on at board meetings or neglects to show up for these meetings. 2. Should such a person be equally or less liable than a director who knowingly votes to approve an illegal or harmful act?arrow_forward
- In US Supreme Court case O'Hagan v. United States (1997), O'Hagan was a lawyer working for Grand Met, a company that was secretly planning to make a tender offer for the stock of Pillsbury, the 'target' firm. O'Hagan bought call options on that stock before Grand Met offer went public. The misappropriation theory articulated by the Court's majority in this case is also called the theory of 'outsider' (rather than 'insider') trading. That is because 0'Hagan was not an insider of Pillsbury, the target. He was an outsider who did not owe a fiduciary duty to the shareholders of Pillsbury. The Court's majority held that he did, however, owe a fiduciary duty to Grand Met, the outside firm holding private material information releyant to the future value of Pillsbury stock.(T/F/U and Why?)arrow_forwardFranchising is a method of distributing products or services involving a franchisorthat establishes the brand's trademark, trade name, business system, and afranchisee who pays a royalty and an initial fee for the right to do business underthe franchisor's name and system. It is a contractual business relationship. Whatdo you think is the prime advantage and disadvantage in having a business ofthis nature?arrow_forward3. Regulation of private pension plans Which of the following are provided by federal regulations of private pension plans? Check all that apply. Insurance of all participants in private defined-benefit plans to receive their benefits upon retirement Transferability of vested pension funds upon a change of employment Insurance of only executive employees participating in private defined-benefit plans to receive their benefits upon retirement Insurance of all participants in private defined-contribution plans to receive their benefits upon retirement Tax benefits only for executive employees Which of the following are the characteristics of the Pension Benefit Guaranty Corporation (PBGC)? Check all that apply. Has no regulatory powers May act as the pension fund manager Affected by economic conditions Has vast regulatory powersarrow_forward
- Bill was with his boss Mr. Big of Computer World Limited at the popular night club SHAG. His boss had alot to drink and was totally out of it. Mr. Big met Ms. Sandra a former model and introduced her to Bill. He told Sandra that Bill has the authority to act for him in any of the companies transactions. Bill in reality has never done so before. In fact Ms Sandra was quite aware of Bill’s status at the company as just a CSR and Mr Big rantings when he is drunk. Ms Sandra however colluded with Bill and entered into a contract for Computer World to purchase $1 million in printers from her. Can this contract with Ms Sandra be enforced based on an agency relationship between Bill and his Boss Mr Big? Discuss with supporting case law. using the IRAC methodarrow_forwardThe Chairman of the Federal Reserve, nominated by the President; may be removed and replaced by the President at will. O by the Supreme Court of the United States. by the President but only "for cause" based on legal grounds. O by the Federal Reserve Board of Governors.arrow_forwardDescribe the role and workings of (1) the Consumer Product Safety Commission (CPSC) and (2) the Consumer Financial Protection Bureau (CFPB).arrow_forward
- You are President and CEO of Apex Business Systems, Inc. (Apex). Apex, through its purchasing agent, bought a new microwave from Inki Appliances Company (Inki) who sells microwaves on a daily basis. There was no written or oral warranty given when the sale was made. The microwave stopped working one week after it was placed it in the company kitchen. Assume also that nobody misused the microwave or in any way caused it to quit working. The purchasing agent returned the microwave three days after it quit working. The owner of Inki refused to repair or replace the microwave or offer a refund. Prepare a demand letter to be sent to Inki.arrow_forwardBill was appointed by Melinda to buy a painting at not more than $1 million. Bill eventually bought the painting for $1.2 million. Melinda wished to ratify Bill's act. Which of the following statements is CORRECT? Melinda could ratify if she did so soon after Bill's unauthorised act. Melinda could not ratify because Bill disobeyed her instructions. Bill had actual authority since he was appointed by Melinda to buy the painting. Melinda could still sue Bill for the price difference after ratifying his unauthorised act.arrow_forwardThe shareholders of Escalante company are suing the external auditors of the company. The shareholders are upset because the management of Escalante company produced overly positive financial statements and used these financial statements to lure new investors. Escalante company is now bankrupt, the managers are facing prison time, and the external auditors are in monetary damages settlement talks with shareholders of Escalante company. What role could the public company accounting oversight board (PCAOB) have played in avoiding this catastrophe?arrow_forward
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