Aquaman is president of a marine research company called “Underwater Leagues, Inc.” On April 1, the research director of Underwater Leagues tells Aquaman that they’ve come up with “Oxygum,” a means of breathing underwater by chewing a special kind of gum. Aquaman knows a great product when he hears it.
He delays announcing the invention to the public so that he can buy all the stock he can get his hands on. He buys 50,000 shares of Underwater Leagues, at $10 a share. After the announcement, the share price skyrockets to $50 per share.
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a) If the shareholders bring a derivative action against Aquaman, what federal law should they accuse Aquaman of having violated (i.e., which federal statute)?
b) Did Aquaman actually violate that statute? Explain.
c) If Aquaman were found to have violated that statute, what remedy would the shareholders be able to seek (i.e., how much money would Aquaman be liable for)?
For this assignment, please use federal case and statutory law since the issues are SEC (federal) issues.
An IRAC-style essay IS appropriate for this assignment for part (b). Part (a) can be answered in one phrase, while part (c) may take up to a few sentences and a case or statutory citation.