Lgl, Poli, Ethcl Dimns of Busn, Case Study Example

Was this scheme a 10(b) violation?

Yes, Mr. Winans and his co-conspirators did knowingly commit fraud in by conducting business that was deceiving to the public in relation with transaction involving stock and other securities. The purpose of this provision was in place to Mr. Winans and his co-conspirators knowingly took part in a scheme that involved indirectly and directly devising a scheme to defraud the general public of information that should be known at the same time as everyone else.

Let’s look at the conduct of Mr. Winans and his coconspirators. Was their conduct illegal under the Securities and Exchange Act and, more specifically, Section 10(b) and Rule 10b-5? If so, how?

Yes, their conduct was illegal under the Securities and Exchange Act section 10b and 10b-5, because the provisions were put in place in order to protect against fraud. These acts support free markets that enables all buyers and seller s to have equal access to the same information, while they also violated the 10b-5 due to the fact that Mr. Winans has access to nonpublic information that was advised to be confidential. The information was then relayed to Mr. Brant that then tipped off others within the scheme where they all breached the law.

Was their conduct unethical? Why or why not?

It was unethical, they violated not only a breach of contract, but also sought to defraud the general public in getting their wallets fatter, by being the first to information dealing with stocks and securities which was also against the law.