Ethical Decision-Making in Sharing Inside Information

Very Hard Professional Standards Application Ethical Decision-making

During a particularly volatile period in the financial markets, James, a portfolio manager at ABC Investments, is approached by a friend outside of work who is seeking investment advice. The friend, aware that James has access to sensitive market information, urges him to share insights about an upcoming earnings announcement from a company that is a significant holding in James's fund. Although James is tempted to provide his friend with non-public information to help them invest, he recalls the strict compliance policies of his firm and the ethical standards outlined by the CFA Institute.

James contemplates whether he should provide the information, considering the potential personal relationship versus his obligations as a charterholder. What should James do in line with ethical standards?

James should provide the information to his friend as a personal favor, since he is not getting compensated for it.

James should refuse to provide any information regarding the upcoming earnings announcement to his friend, adhering to both his firm's policies and CFA ethical standards.

James should share publicly available information and suggest his friend also conduct independent research.

Hint

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% Correct95%