Insider Trading Ethics and Market Integrity

As an investment professional working for a boutique asset management firm, you have recently come across sensitive non-public information regarding a pending merger between two publicly traded companies. This information was shared in a closed meeting with select team members, including you, as part of routine internal discussions. As you deliberate on the ethical implications of this situation, you consider the potential advantages you may gain from trading the stock of the companies involved prior to the public announcement.

Reflecting on the CFA Institute's Code of Ethics and Standards of Professional Conduct, particularly regarding the integrity of capital markets, you must address the following:

1. Discuss the implications of trading on non-public information in terms of ethical standards and its effects on market integrity.
2. Examine the potential consequences of failing to adhere to these standards, both personally and for your firm.
3. Propose alternative actions that align with ethical standards while considering the firm’s interests.