Ethical Decision-Making in Investment Disclosure

Very Hard Professional Standards Application Ethical Decision-making

As a CFA charterholder and senior investment analyst at Apex Capital Management, Sarah is tasked with evaluating a potential investment in a new technology firm, Innovatech. During her research, she discovers that Innovatech is involved in a lawsuit for patent infringement which could adversely affect its financial stability. Furthermore, Sarah finds that her firm, Apex Capital, has not publicly disclosed this potential risk in its reports to clients.

Sarah feels compelled to inform her team about the legal issues but is unsure whether to disclose the information in her upcoming presentation that’s aimed at securing approval for the investment in Innovatech. This is a critical decision, as it could shape the opinions of senior management and impact her career.

What should Sarah do in this situation to uphold ethical standards?

Proceed with the presentation and avoid mentioning the lawsuit, as it is not public information.

Disclose the potential risks associated with the lawsuit during the presentation, emphasizing the importance of transparency.

Inform her supervisor privately about the lawsuit and suggest delaying the presentation until further information is available.

Hint

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