Kapadia is a trader for a asset management company that manages several large global mutual funds.

Kapadia executes the equity buy-and-sell orders for the portfolio managers of one of the company’s

mutual funds. He has discretion to execute the orders at any time during the day depending on market

conditions. Prior to executing the orders, Kapadia contacts several close friends and relatives to

provide them with information on what securities are set to be traded by the mutual fund. In turn, they

make trades that mirror the imminent trades to be executed by Kapadia on behalf of the mutual fund.

Kapadia’s actions are