Handling Insider Information and Conflicts of Interest

Very Easy Professional Standards Application Conflicts Of Interest

As a financial analyst, you manage a portfolio that includes stocks from various companies. You are also a board member of one of the companies in your portfolio. Recently, the company you serve on the board of has announced a major acquisition, which could materially affect its stock price. You are aware of this information prior to the public announcement.

According to CFA Institute's Standards of Professional Conduct, what should you do regarding your investment decisions in relation to this company?

You should sell your shares immediately to avoid any appearance of impropriety.

You can hold the shares but must disclose your position to your employer.

You should refrain from trading the shares until after the public announcement.

Hint

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