Final answer:
Shareholders coordinating share purchases to inflate stock prices prior to a merger exemplify market manipulation. For The Darkroom Windowshade Company, a coalition between Investors 1, 2, and at least one other with significant shares, like Investor 3, can control the company's decisions.
Step-by-step explanation:
The question involves a scenario where the shareholders of DCV Corporation are coordinating their share purchases to artificially inflate the stock price prior to a merger. This behavior is an example of market manipulation, which is illegal and unethical as it misrepresents the company's actual financial condition to potential investors. It is not insider trading, which involves trading based on non-public, material information, nor is it stock dilution, which occurs when a company issues more shares, reducing the value of existing shares. It is also not related to dividend reinvestment, a process where dividends are used to purchase more shares of the company's stock.
Looking at the provided information for The Darkroom Windowshade Company, to determine the minimum number of investors needed to change the company's top management, one must calculate the majority shareholding. With 100,000 shares outstanding, more than 50,000 shares are needed to hold the majority. Investors 1 and 2 have a combined total of 38,000 shares (20,000 + 18,000), so they do not have enough shares alone to guarantee control. However, if they combine with Investor 3, who holds 15,000 shares, their total would be 53,000 shares, surpassing the 50% threshold.
If investors 1 and 2 agree to vote together with at least one more investor who owns sufficient shares to pass the 50% mark, such as Investor 3, they can be certain of their control over the decisions regarding the company's management. A coalition of shareholders is common in corporate governance to ensure a controlling interest. However, this only ensures their control as long as they maintain the majority and the other shareholders do not form a larger voting bloc against them. It is important for the board of directors and shareholders to consider the short-term and long-term implications of their decisions on the company's growth and legal compliance, as per SEC regulations.