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Peer Reply Guidance

· Reply to the main posts of two (2) different peers on different days throughout the week. Both responses should be original and substantive and encourage discussion and critical thought by proposing a different point of view or clearly elaborating on or asking an analytical  question about at least one (1) point of issue of your peer’s post, (Note: "what do you think?" "do you agree?" and the like, are not analytical questions.)

Alan (No more than 150 words

Greetings Class and Professor,

Today I'll be exploring insider trading and evaluate a recent case that offers a clear example of the unlawful behavior and the regulatory actions taken in response.

To begin, insider trading occurs when an individual trades securities using material nonpublic information obtained through a position of trust or special access. This conduct is illegal because it undermines market fairness, damages investor confidence, and distorts pricing mechanisms essential for efficient markets (Investor.gov, n.d.). It also signals deeper governance weaknesses since unethical choices increase operational risk and erode internal compliance structures (Wissda, 2024; Redcliffe Training, 2023). These concerns also align with core principles of commercial law, where courts emphasize good faith and enforceable obligations, as illustrated in Carlill v Carbolic Smoke Ball Company (Stephens, 2011).

The specific statutes violated in insider trading cases are Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b5, which prohibit fraudulent or deceptive practices in connection with securities transactions (Boise State University, 2022).

A recent example is SEC v. Joseph M. Dupont et al. (2024). In this case, Joseph Dupont, then a vice president at Alexion Pharmaceuticals, tipped confidential acquisition information about Portola Pharmaceuticals to his friend Shawn Cronin. Cronin then passed the information to additional individuals, who traded Portola securities ahead of the public announcement. Their conduct constituted insider trading because they used material nonpublic information to profit from the acquisition news. Thus, harming ordinary investors who lacked access to the same information (SEC, 2025). The case also illustrates why insider trading remains difficult to detect because regulators must navigate sophisticated trading patterns and ambiguous intent (CNBC, 2023).

The case resulted in significant penalties. Cronin received three months imprisonment, forfeiture of more than seventy thousand dollars, and a five thousand dollar fine. Kaplan received five months imprisonment and forfeiture exceeding four hundred thousand dollars. Feldman received three months imprisonment, forfeiture exceeding one point seven million dollars, and a twenty five thousand dollar fine. Mendoza forfeited more than thirty eight thousand dollars, and Dupont paid a seventy five thousand dollar fine. They also agreed to permanent injunctions and restrictions preventing them from serving in leadership roles within public companies (SEC, 2025).

Overall, I think this outcome is just because the penalties take away the money gained from the misconduct and the criminal charges strengthen deterrence. Hence, supporting ethical governance and market integrity (Wissda, 2024).

Thank you for reading my post. I look forward to digging deeper into this topic with you all and gaining your perspectives. 

Julio (No more than 150 words)

Hi Professor and everyone, Insider trading was my topic because it allows people to have the upper hand over other investors. If someone knows something about a security, they can use it to their advantage by buying or selling stocks or by telling others to do the same. This puts other investors at a disadvantage. The SEC charged a public company president and Chief Investment Officer, Alfred V. Tobia, and his sister-in-law, Elizabeth Lee. The SEC said Mr. Tobia told his sister-in-law about two upcoming business deals. Ms. Lee purchased stock in both companies and sold it after the news became public and prices rose. According to the SEC, the trades generated more than $428,000 in profit. More information about this case is available here. They were charged under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. These rules help prevent deception or fraud when buying/selling securities. They both decided to settle the case without admitting or denying anything. On January 16th 2025, the court issued final judgments. Mr. Tobia was barred from committing these acts in the future and cannot serve as a public company officer or director for the next 5 years. He was also fined $785,020. Ms. Lee was also barred from doing this and was fined $576,955. I feel the SEC made a fair decision. They fined both parties more than they made from trading. The SEC also prohibited Mr. Tobia from leading a public company. Laws alone won't fix this issue; we need stronger insider-trading controls.