Question

Chiarella worked as a “markup man” in the New York composing room of Pandick Press, a financial printer. Among the documents, that Chiarella handled were five secret announcement of corporate takeovers. The tender offerors had hired Pandick Press to print the offers, which would later be made public. When the documents were delivered to Pandick Press, the identities of the acquiring and target corporations were concealed by blank spaces. Chiarella was able to deduce the names of the target corporations before printing. Without disclosing the knowledge, he purchased stock in the target corporations and sold the share immediately after the takeover attempts were made public. Chiarella made $30,000 because of these stock trades. He was later charged criminally for violation of the 1934 Act. Is he guilty? Explain.

Answer 1

According the securities exchange act 1934, the SEC as the power to oversee securities which actually stocks, bonds and apart from that they also have the power to check over-the-counter securities, markets and the conduct of financial professionals including brokers, dealers and investment advisors, and also get to monitor the financial reports that publicly traded companies are required to disclose on the whole. When checked in that way, Cindrella was caught and was foung guilty. Therefore she's guilty on the whole.