Insider Trading and Reporting of Criminal Activity

B

A member must always abide by the AIMR code, unless the local laws in any given case are stricter, in which case, the stricter standard applies. Standard I.

The correct answers for the question are:

With regard to insider trading, Carl must follow Meesapotamian law. With respect to reporting of criminal activity, Ann must follow Gondwana law.

Here's a detailed explanation:

Insider trading refers to the practice of trading securities based on material, non-public information. It involves buying or selling securities, such as stocks or bonds, using information that is not available to the general public. Insider trading is generally considered unethical and illegal in many jurisdictions, as it creates an unfair advantage for individuals with access to privileged information.

In the given scenario, Carl Pagan lives in Meesapotamia, where insider trading is not considered a crime. Since insider trading is not prohibited by Meesapotamian law, Carl is not legally obligated to refrain from engaging in insider trading. However, it is important to note that even though it may not be illegal in Meesapotamia, insider trading still violates the Association for Investment Management and Research (AIMR) code of ethics.

The AIMR code of ethics is a set of guidelines and principles established by the Association for Investment Management and Research (now known as the CFA Institute) to promote ethical conduct in the investment profession. The AIMR code explicitly prohibits insider trading and requires investment professionals to act with integrity and in the best interests of their clients.

On the other hand, Ann Dreen lives in Gondwana, where an investment professional must report any knowledge of criminal activity to the appropriate authorities. In Gondwana, investment professionals are legally obligated to report any knowledge of criminal activity they come across in the course of their work. This requirement aims to ensure that illegal activities, such as insider trading, are reported and investigated by the relevant authorities.

Therefore, Ann must follow Gondwana law and report any knowledge of criminal activity, including insider trading, to the appropriate authorities. This legal obligation goes beyond the requirements of the AIMR code of ethics, which does not explicitly mandate reporting criminal activity to authorities.

To summarize, Carl must follow Meesapotamian law regarding insider trading, while Ann must follow Gondwana law concerning the reporting of criminal activity.