Ethical Dilemma in Personal Investment Disclosure

Very Hard Research Objectivity Standards Personal Investments

During a recent compliance meeting, a portfolio manager, Claire, disclosed that she had purchased shares of a company that her firm had recently initiated coverage on. Her firm specializes in technology sector investments, and the company in question is expected to experience significant growth. Claire's actions immediately raised concerns among her colleagues regarding the firm's compliance with the CFA Institute's Code of Ethics and Standards of Professional Conduct, particularly related to Research Objectivity Standards and Personal Investments.

The firm has a strict policy requiring employees to pre-clear personal investments in any securities covered by the firm's research team. Claire did not seek pre-clearance and executed her trade after she learned about the company's coverage from a private briefing.

Given this situation, which of the following actions would most appropriately align with the CFA Institute’s Research Objectivity Standards regarding personal investments?

Claire should have avoided investing in the company entirely until after the firm's research findings were publicly released.

Claire must disclose her personal investment to her supervisor and may continue to hold the shares.

Claire should sell the shares immediately and report the violation to the compliance department.

Hint

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% Correct93%