Ethical Decision-Making in Financial Analysis

Very Easy Professional Standards Application Ethical Decision-making

John is a financial analyst at a large investment firm. He has a close relationship with a company that his firm is considering investing in. Recently, he learned from his friend, who works at that company, that they are about to release a positive earnings report that could significantly influence the stock price. Knowing this, John faces a dilemma about whether to share this information with his clients before the public release. According to the CFA Institute's Code of Ethics and Standards of Professional Conduct, what should John do?

John should inform his clients about the upcoming earnings report, as it represents a good investment opportunity.

John should refrain from disclosing the information to his clients until the earnings report has been made public.

John should disclose the information to his clients under the premise that he is acting in their best interest.

Hint

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