Joe is employed as a Senior Vice President at a successful company in Pennsylvania. During a staff meeting, the company's CEO announced some very good news to Joe and the other high-level company executives -- the company was going to acquire one of its competitors, G Company, via the tender offer (takeover & merger) process. The company's general counsel then did what corporate attorneys often do: he reminded the executives that this news was not yet public information and to treat it as confidential.
That night, Joe received a call from his childhood friend and golfing buddy, Gary, who lived in New York. During that conversation, Joe told Gary that his company was going to acquire G Company. The next day, Gary spread the news among six of his friends. Each immediately began buying stock in Joe's company. Each sold his stock a week later when the pending merger of the two companies was publicly announced. Each made a handsome profit on the sale because the stock price jumped after announcement of the merger. Collectively the group made over $275,000.
Answer the following questions in the space provided below:
1. What did Joe do wrong?
2. What did Gary and the others do wrong?
3. What penalties should be imposed on Joe, Gary, and the others?
Be specific, and be sure to discuss your answers in the context of insider trading law.