Ethical Decision-Making regarding Insider Information

As a portfolio manager at a registered investment advisory firm, you recently overheard a conversation during a casual lunch about an impending merger between two publicly traded companies. The conversation revealed material nonpublic information regarding the merger's positive impact on the target company's stock price.

Upon returning to the office, you are faced with an ethical dilemma. While you know the information could lead to profitable trading opportunities, you also understand that acting on nonpublic material information would violate the CFA Institute's Code of Ethics and Standards of Professional Conduct regarding the integrity of capital markets.

Discuss the ethical considerations you must weigh in this situation and outline the steps you should take to uphold the integrity of the capital markets.