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Merging Companies


Submitted By mjt1018
Words 371
Pages 2
Jennifer Thell
LS311: Business Law
Unit 9: Assignment

Merging two companies can affect the income, expenses, and the stock of the newly formed company. To ensure that the merger will not create an unfair advantage on the market the government created rules under the Securities and Exchange Commission. They regulate how and which companies can complete their mergers. The intent is to prevent companies from creating monopolies and eliminate any type of competition. For the merger between Reliant and Gasworks, registration with the SEC would be a requirement. A registration includes the securities being offered, all the properties of a company, all management details, how the proceeds of a sale are used, and any risks involved. (Miller and Jentz. 2008.) The merger is the combination of two companies where one is buying out another. Due to one of the companies being sold, the registration will be needed. Emerson has violated the rules of the SEC. He had information that was not yet released to the public about the possibility of a valuable increase in the stock. Emerson may not have intentionally release this information, but did so none the less. He could be found guilty of insider trading because of his statement. Wallace used the information of the upcoming trade that he learned of through Emerson to profit. Knowing that this information was not yet public, he is guilty of insider trading. He bought the stock based on his knowledge while it was priced low and after the merger sold the stock for a large sum. In order to properly bring the charges against Emerson or Wallace, the prosecutor would need to be sure that the financial statements are accurate. According to the Sarbanes-Oxley Act, the prosecutor must prove the defendant acted willfully. The jury should not have to make that decision. (Miller and Jentz. 2008.) Officers of companies

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