Insider Trading
Significant Facts:
Joe Erlich manager of materials has just been knowledgeable of the vital news of his current company Soquel Circuits buying out its adversary Modesto Modules; the only other supplier of the Frampton Framostat. Modesto Modules has built up a market share by offering a functionally equivalent product to the Frampton Framostat at a substantially lower price than Soquel Circuits could. Modesto Modules organization worked in an entirely different manner than Soquel Circuits in that they oran a very efficient, low overhead operation and offered little customer service allowing them to sell their products for cheap. On the other hand Soquel Circuits offered first-rate products obviously at an elevated cost but fully guaranteed and backed their products. Erlich concluded that this buyout would mean Soquel Circuits offering a two rank product line, basically created great revenue through this monopoly they would create upon the Frampton Framostat product. To him job security in the future looked extremely in good health. But Erlich always realized this would cause the company to move to Modesto where overhead was extremely more appealing than that of Soquel. This move did not sit well with Erlich and he definitely knew it would not sit well with his family. His family was dedicated to Soquel. Erlich realized that he could financially gain from this takeover by investing in stock of the company. He knew the acquisition would cause the company stock to sky rocket. All he has to do now is pick up the phone and place the order with his broker. Thoughts of Ivan Boesky whom was charged with illegal insider trading at a million dollar scale years ago ran through Erlich's mind. Was it ok for him to purchase stock based on his knowledge ...