Liliana works for Bear Funds, a brokerage firm. Bear has a policy of not allowing its employees to trade in securities in which it has large holdings. A list of such securities is circulated on a daily basis to the employees. Liliana knows of this restriction. However, a few days ago, she happened to purchase a few shares of a firm that are on Bear's restricted list. The total value of the purchase was less than $500. Liliana should
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A. B. C. D.B
Standard III (C) - Disclosure of Conflicts to Employer.
The correct answer is B. report the transaction to the compliance department and see how best to unwind the transaction.
Liliana, being an employee of Bear Funds, is aware of the company's policy that prohibits employees from trading in securities in which the firm has significant holdings. The policy aims to prevent conflicts of interest and ensure the integrity of the firm's operations. It is important for employees to adhere to such policies to maintain trust and ethical standards within the organization.
In this case, Liliana made a purchase of shares from a firm that is on Bear's restricted list. Although the total value of the purchase was less than $500, it is crucial for Liliana to take appropriate action.
Option A, "none of these answers," is incorrect because Liliana should address the situation rather than ignoring it.
Option C, "inform her immediate supervisor about it and accept any sanctions," is not the best course of action because Liliana should involve the compliance department, which is responsible for overseeing and enforcing the firm's policies. It is the compliance department's role to handle such situations and determine the appropriate actions to be taken.
Option D, "not do anything, because the activity is of negligible size," is incorrect because the value of the transaction does not justify ignoring the company's policy. Compliance with the policy is necessary regardless of the size of the transaction.
Therefore, the best course of action for Liliana is to report the transaction to the compliance department. By doing so, Liliana demonstrates her commitment to adhering to the firm's policies and maintains transparency and integrity. The compliance department will then assess the situation and provide guidance on how to unwind the transaction appropriately, ensuring compliance with the company's policies and regulations.
It is essential for employees to take prompt action when they inadvertently violate company policies to rectify the situation and maintain a strong ethical foundation within the organization.