John's Ethical Dilemma: Reporting Misconduct

John is a Chartered Financial Analyst (CFA) working for a prominent investment firm. He recently discovered that one of his colleagues, Sarah, has been using non-public information about a potential merger to trade stocks in her personal account. Although John has always adhered to the CFA Institute's Code of Ethics and Standards of Professional Conduct, he is concerned about the repercussions of reporting Sarah to their compliance department. John knows that Sarah has been under significant personal financial strain, and he is torn between the ethical obligation to report misconduct and the potential harm to Sarah's career.

What should John do in this situation?