Reference no: EM13299636

Dracca's Senior Vice President of Sales, Bob Marley, and one of his sales representatives, Bill Farian, were on a conference call and learned that Dracca's new line of high chairs was going to be recalled the next day. During the call, Farian stated, "This won't be good for stock prices." After the call ended, Marley and Farian immediately contacted their brokers and sold a large portion of their interests in Dracca shares.

Very Good Vinyls (VGV) was a plastic company that periodically purchased used equipment from Dracca's plant where the new line of high chairs was produced. In 2009, VGV purchased a 750-ton injection-molding machine from Dracca for $150,000. Because of the good relationship between VGV and Dracca, Dracca extended credit to VGV for the equipment. Last month, VGV sold the injection-molding machine to a small start-up company for $1,500 two days before filing bankruptcy. VGV still owes Dracca $100,000 for the machine.

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