On August 31, 2017, the SEC charged Evan R. Kita, a CPA and former accountant at Celator Pharmaceuticals, Inc., and three others with insider trading on market-moving news about the New Jersey-based pharmaceutical company where the accountant formerly worked. Kita tipped two of his friends with confidential information about the clinical trial results for Celator’s cancer drug and its acquisition by Dublin, Ireland-based Jazz Pharmaceuticals Plc almost three months later. Celator’s stock rose 400 percent in March 2016 when it announced positive results for its drug to treat leukemia, and Jazz Pharmaceuticals offered to pay a hefty premium in May 2016 to acquire Celator.

According to the SEC’s complaint, the two friends purchased Celator stock based on Kita’s tips before the two announcements and agreed to share their trading profits with Kita. To avoid detection, Kita allegedly communicated with the two friends through an encrypted smartphone application.

Assuming the facts are correct, what ethical rules were violated by Evan Kita in this insider trading case? Do you think Kita committed an act discreditable to the profession? What do you think is the appropriate enforcement action the state board of accountancy should take against Kita?