Ethical Decision-Making Regarding Non-Public Information

Hard Ethical Decision-making Integrity Of Capital Markets

Jessica, a portfolio manager at a large investment firm, has been analyzing two different investment opportunities: Company A, which is planning to launch a new product, and Company B, which is suspected of accounting irregularities. During her research, she learns through contacts that Company A's product launch has been delayed due to issues with suppliers, potentially affecting its stock price. However, she has not yet confirmed this information officially. Jessica is under pressure to make a decision on her investments to outperform her firm’s benchmark by the end of the quarter.

Given her findings, Jessica is contemplating whether or not to act on the non-public information regarding the delays of Company A's product launch, as it might give her investment strategy a competitive edge. What should Jessica do, considering the integrity of capital markets?

Proceed to sell Company A's stock short, as the information could significantly impact its price.

Wait for official confirmation of the product launch delay before making any investment decisions.

Invest heavily in Company A now, believing that the delay will be short-lived and won't affect its long-term prospects.

Hint

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