Understanding Obligations Regarding Misconduct

Very Hard Cfa Institute Code And Standards Professionalism - Misconduct

As a financial analyst working for a global investment firm, you receive confidential price-sensitive information about a potential acquisition of a public company. Unbeknownst to you, your colleague has internally circulated this information to select clients, resulting in those clients trading on this nonpublic information. After an internal investigation, your firm finds out about the misuse of information and seeks to take disciplinary action.

Your firm's compliance officer asks for your input on how to address this misconduct given the CFA Institute's Code of Ethics and Standards of Professional Conduct. Which of the following statements best reflects an understanding of the obligation of individuals concerning the misconduct exhibited by your colleague?

The obligation rests solely on the colleague who disseminated the information, as you had no involvement in the act.

As an employee, you have a duty to report the misconduct to the appropriate regulatory authority regardless of your involvement.

You should advise the firm to not take any action since your colleague was acting on their own accord and there were no consequences to you.

Hint

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