Question

Read the following scenario.

Harriet Moore is an accountant for New World Pharmaceuticals. Her duties include tracking research and development spending in the new product development division. Over the course of the past six months, Harriet has noticed that a great deal of funds have been spent on a particular project for a new drug. She hears “through the grapevine” that the company is about to patent the drug and expects it to be a major advance in antibiotics. Harriet believes that this new drug will greatly improve company performance and will cause the company’s stock to increase in value. Harriet decides to purchase shares of New World in order to benefit from this expected increase.

Discuss Harriet's ethical responsibilities, if any, with respect to the information she has learned through her employment at New World.

Answer 1

Accounting is a profession which is based mainly on the integrity of the accountants because accountants are often trusted with the financial information. So they are expected to maintain the highest degree of ethical behaviour.The accountant should not be benefited personally by the information he gets inside the company.

Inside trading: SEC (The U.S securities and exchange commission) defines illegal trading as the "buying and selling a security in breach of a fiduciary duty or other relationship of trust and confidence,on the basis of material,non public information about the the security"

Here Herriet comes to know the information of the new drug which yet to be produced by the company . The information is not made available for the public yet. So if she buys the shares of the company before the information made available to the public then it will be amount to inside trading that is illegal. she should maintain her responsibility towards the information she received by not getting benefited personally using the information. Moreover she should not disclose the information to anyone.

Harriet moore should maintain the confidentiality of the information that she received and she shouldn't buy the company's shares based on the non public information available befor everyone receives the same