A is corrent because under the Securities Exchange Act of 1934, insiders include officers, directors, and beneficial owners of more than 10% of any class of the issuer’s equity securities. An owner of 15% of the total face value of the corporation’s outstanding debentures therefore does not qualify as an insider.
B is incorrect because under the 1934 Act, insiders include officers, directors, and beneficial owners of more than 10% of any class of the issuer’s equity securities. Thus, a president, as an officer, would be an insider.
C is incorrect because under the 1934 Act, insiders include officers, directors, and beneficial owners of more than 10% of any class of the issuer’s equity securities. Thus, a member of the board of directors would be an insider.
D is incorrect because under the 1934 Act, an insider includes a beneficial owner of more than 10% of any class of the issuer’s equity securities. Beneficial ownership includes ownership of securities owned by oneself, securities in a spouse’s name, a minor child’s name, or a relative’s name who shares the same home. Beneficial ownership also includes ownership of securities held in a trust, of which an insider is a beneficiary. Thus, a shareholder who owns 8% and whose wife owns 4% of the outstanding common stock would qualify as an insider.
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