Ethical Decision-Making and Market Integrity

As a portfolio manager at a prominent investment firm, you are approached by a long-time client who inquires about an upcoming earnings report from a company in which you hold a significant position. The client mentions that they have heard rumors from a friend working at the company about the potential for an exceptionally positive earnings surprise. The client requests that you provide your perspective on how this may affect the stock price and whether they should adjust their investment strategy accordingly.

Consider your ethical obligations regarding the integrity of capital markets in your response to the client. Discuss the implications of sharing or acting on the information regarding the earnings report, the responsibilities you have in maintaining market integrity, and how your actions align with the CFA Institute’s Code of Ethics and Standards of Professional Conduct.