Ethical Obligations Regarding Insider Trading

Very Hard Cfa Institute Code And Standards Conflicts - Priority Of Transactions

As a financial analyst at a large investment firm, you are presented with a situation where you have access to privileged information about an upcoming merger that could significantly impact the stock prices of the companies involved. You overhear a colleague in the break room mentioning their intention to purchase stock in one of the companies before the public announcement is made. Given the CFA Institute Code of Ethics and Standards of Professional Conduct, how should you respond to this situation to uphold your ethical obligations?

You should inform your colleague that they must refrain from trading on this information until it is publicly available.

You should remain silent and allow your colleague to trade as it is their personal decision.

You should inform your supervisor about the potential insider trading activity.

Hint

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