Ethical Analysis of Material Information Disclosure

Very Hard Professional Standards Application Ethical Decision-making

Maria is a financial analyst at a well-known investment firm. Recently, she received an urgent request from her firm's portfolio manager to provide an analysis on a new technology stock that her firm is considering for investment. In reviewing the company's financials, Maria discovers that the company's CEO recently sold a significant portion of his personal shares well before the public announcement of an earnings shortfall.

Maria is aware that disclosing this information could adversely affect her firm’s position if they decide to invest in the stock. However, she also understands her responsibility to uphold the ethical standards of integrity and transparency as outlined by the CFA Institute. Faced with this dilemma, Maria deliberates on the best course of action.

What should Maria do in this situation to maintain her professional and ethical obligations?

Provide the analysis to the portfolio manager without mentioning the CEO's share sale to avoid harming the firm's investment prospects.

Disclose the CEO's share sale to the portfolio manager as material non-public information, ensuring full transparency in her analysis.

Refuse to provide the analysis altogether and advise the firm to avoid investing in the stock due to reputational concerns.

Hint

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Correct828

% Correct84%