Dale Emerson served as the chief financial officer for Reliant Electric Company, a distributor of electricity
serving portions of Montana and North Dakota. Reliant was in the final stages of planning a takeover of
Dakota Gasworks, Inc. a natural gas distributor that operated solely within North Dakota. Emerson went
on a weekend fishing trip with his uncle, Ernest Wallace. Emerson mentioned to Wallace that he had
been putting in a lot of extra hours at the office planning a takeover of Dakota Gasworks. On returning
from the fishing t rip, Wallace met with a broker from Chambers Investments and purchased $20,000 of
Reliant stock. Three weeks later, Reliant made a tender offer to Dakota Gasworks stockholders and
purchased 57% of Dakota Gasworks stock. Over the next two weeks, the price of Reliant stock rose 72%
before leveling out. Wallace then sold his Reliant stock for a gross profit of $14,400.
Based on the information provided, Dale Emerson, the chief financial officer for Reliant Electric Company, mentioned to his uncle Ernest Wallace that he had been involved in planning a takeover of Dakota Gasworks. After returning from a fishing trip, Wallace purchased $20,000 worth of Reliant stock through a broker from Chambers Investments. Three weeks later, Reliant made a tender offer to Dakota Gasworks stockholders and acquired 57% of the company's stock. Over the following two weeks, the price of Reliant stock increased by 72% before stabilizing. At this point, Wallace sold his Reliant stock and made a gross profit of $14,400.
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