Roger Mcdaniels Sat in Front Acct 436 Ethics Case Study

Roger McDaniels sat in front
ACCT 436 ETHICS CASE STUDY

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1. Identify and briefly discuss the key issue(s) in the case.
The key issues in this case study are two. The first issue is whether Roger’s action of using Cambridge’s confidential information concerning their investment plans in Dugas Incorporation to divert the consequences of selling the supreme ownership and control rights to Cambridge is justifiable. Or, whether this action is possibly to be deemed as insider trading and/or tipping. According to the SEC, insider trading is whereby an employee without being authorized breaches the fiduciary duty and uses confidential information regarding the company’s stock which is not yet publicly declared to trade. Tipping is whereby an insider discloses such information intentionally to third parties, such as family and friend, and provides them with stock information so that they may be the first to benefit most before the stock is publicly declared (which is illegal). This two issues are not there as the secretary was not in any way whatsoever connected to Rogers and had sent those documents by mistake. We also do not find it as tipping and even the stock information concerning the prices is accessed by Rogers online. We can therefore find Roger’s actions under Regulation D qualifying as a sophisticated investor and accredited investor. Private placements under the SEC’s Regulation D aren’t illegal and the SEC maintains that can have obtained the information through such accidental means as Rogers did and the risks involved fall barely on the investor.
The second issue is whether Beth should disclose the matter to the Board of Directors or not, and in that case how would she be found not to act ethically? In order to examine whether she acted ethically or not, it’s important to understand that there’s a protocol that is followed in an office; the chain of command and the...