question archive Zhang is working as an office assistant in Invest PLC
Subject:BusinessPrice: Bought3
Zhang is working as an office assistant in Invest PLC. to help pay for his University.
He transcribes a memo from the Director to Illan, the manager of a high-profile venture
capital fund stating explaining that the Director had just fielded a call from Cheep
Phone PLC. asking for advice on an impending merger with Popular Phone Co. Cheep
Phone PLC.'s share prices are currently very low, but when news of the merger is
released the share prices would inevitably skyrocket.
Zhang has some extra money and decides to quickly invest £10,000 into Cheep Phone
PLC. When the news breaks the share price goes from £10 a share to £1000 a share.
As legal counsel for Invest PLC. you have been asked to advise Zhang whether he
violated any civil laws, or committed and criminal offences. You have also been asked
to include a brief explanation of why these insider dealing rules are important for the
proper functioning of markets.