36. In which of the following situations is an employee of a public company permitted to trade upon the information without violating insider trading laws?
Answer: D
An employee is permitted to trade upon information available on a public website.
The employee is allowed to trade based on information from a public website that discusses key developments regarding a class action lawsuit involving the company, as this information is publicly available and does not constitute insider trading.
A) The chief financial officer complains to the employee that earnings next quarter will be markedly poorer than expected.
This option is incorrect because the information shared by the chief financial officer is considered non-public and material. Trading based on this insider information would violate insider trading laws, as it has not been made available to the general public.
B) The employee's neighbor works for the government and informs him that a major government contract will be awarded to the company next month.
This option is also incorrect. The information regarding the pending government contract is non-public and material, making it illegal for the employee to trade based on this insider information, as it could significantly affect the company's stock price once disclosed.
C) The employee's spouse works in the corporate headquarters and shares with him a conversation overheard at work regarding possible acquisition targets.
Option C is incorrect because the conversation overheard is considered non-public and material information. Trading on this information would violate insider trading laws, as it is not available to the public and could influence investors' decisions.
D) A coworker sends a link to the employee for a public website that highlights key developments in an ongoing class action lawsuit involving the company.
This option is correct. Information available on a public website is not considered insider information, as it is accessible to all investors. Therefore, the employee can legally trade based on this publicly available information without violating insider trading laws.
Conclusion
The correct answer is D, as it pertains to information that is publicly accessible and does not constitute insider trading. Options A, B, and C all involve non-public, material information that would result in legal repercussions if acted upon. Thus, D is the only choice that allows for legal trading activity based on the information provided.