Ethical Considerations for Personal Investments

Very Hard Research Objectivity Standards Personal Investments

As a portfolio manager at a large investment firm, you are required to adhere to the CFA Institute's standards of professional conduct. Recently, you completed an analysis on a small-cap technology company, which you believe has significant upside potential based on your research findings. In your excitement to capitalize on this opportunity, you consider making a personal investment in the company's stock before your firm initiates a buy recommendation. While contemplating this move, you remember that your firm's policies on personal trading require disclosure of all personal investments that could materially affect your job.

Which of the following statements best describes your course of action to remain compliant with the CFA Institute's Research Objectivity Standards regarding personal investments?

You can purchase the stock immediately since you believe it is undervalued, as long as you inform your compliance department after the fact.

You must wait until your firm has publicly communicated its investment stance on the company before making any personal investments.

You are allowed to invest in the stock immediately if your analysis is independent and based solely on public information.

Hint

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