Answer these 3 Discussion Questions – Max 90 words per question.
Corporate Regulations and Change Class
1. Day trading incurs when an investor makes numerous trades in one day and holds no stocks at the end of the day. All purchases are sold by days end. Do you think this is part of an over the counter market or exchange? Why or why not? Would the prudent man rule apply to the broker who completes the transaction for the investor? Why or why not? What is the risk in this type of trading?
2. A director of a corporation, which offers its stock to the public, attended a directors meeting where it was discussed that earnings will be lower than expected. After the meeting he informs his sister of the information. She informs her friend Martha who immediately calls her broker and tells him to sell. She sells the stock and she avoids a severe financial loss. Suppose she is charged with securities fraud. She does not tell the truth about how she got the information. Thereafter, she is convicted of obstruction but not of any securities violation. If she is sentenced to prison, is this fair? Why or why not? What should have been her punishment, if any?
3. A broker at a local brokerage is quite fond of coming to the office at various hours of the night and day to take advantage of different time zones and the opening and closing of markets in the time zones. He specializes in investing funds contained in mutual funds. His actions are producing returns for his clients. However, is his conduct proper and ethical? Why or why not? Since he is making his clients money, he hints that he should receive some form of a “gift” beyond his commission. Do you think this is proper? Why or why not?
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