Ethical Implications of Investing Based on Non-Public Information

In a recent analysis of potential investments for your clients, you have uncovered some critical information about a company, WidgetCorp, that is not yet public. WidgetCorp is on the verge of launching a revolutionary product that is expected to significantly increase its market share and profitability. However, the news will not be released to the public for another month due to pending regulatory approvals.

Your firm has a strict policy against utilizing non-public information for investment decisions. Nonetheless, the analysts in your department are pushing for an immediate investment in WidgetCorp, believing that if your firm does not act quickly, others will take advantage of the situation prior to the public announcement.

You must decide how to proceed. Discuss the ethical implications of making an investment in WidgetCorp based on this non-public information and outline your recommended course of action, considering the CFA Institute Code of Ethics and Standards of Professional Conduct.