Gary is an employee of Thomaston Scientific Co. Gary learns that the R&D department has just discovered a new drug that will help treat heart disease better than similar medicines already on the market. Gary tells his friend Patrick about the discovery, discloses where the information came from, and asks Patrick to keep it private. Instead, Patrick purchases Thomaston Scientific stock and profits from the transaction. Patrick will be:
a. found liable under the Private Securities Litigation Reform Act.
b. found liable for insider trading as a tippee.
c. not found liable for insider trading, because Patrick did not have a fiduciary duty to Thomaston Scientific
d. not found liable for insider trading, because Gary did not breach his duty to the company when he told a friend
Answer: b. found liable for insider trading as a tippee.
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