Ethics in Non-Public Information Trading

Medium Professional Standards Application Responsibilities To Employers

Jane is a portfolio manager at XYZ Asset Management. Recently, she came across information that a major technological innovation by one of her portfolio companies could significantly inflate its stock price. Jane is interested in leveraging this information to ensure her clients' portfolios are adjusted ahead of market reactions.

However, her firm's compliance department has specific policies that prohibit trading based on non-public information until it is publicly disclosed. Jane is aware of these policies but believes that trading on this information would ultimately help her clients in the long run. In light of these circumstances, which of the following actions would be the most ethical according to the CFA Institute's Code of Ethics and Standards of Professional Conduct regarding her responsibilities to her employer?

Proceed with trading the stock to benefit her clients, arguing that her intention aligns with their best interests.

Inform the compliance department about the non-public information and seek guidance on how to act in accordance with firm policies.

Wait until the information is publicly disclosed before making any decisions regarding the stock trade.

Hint

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% Correct82%