Question
Bobby recently graduated from college and went to work for a public accounting firm. For his first engagement, Bobby was assigned to an Internal Audit
Bobby recently graduated from college and went to work for a public accounting firm. For his first engagement, Bobby was assigned to an Internal Audit Outsourcing engagement at a large financial service firm. Since Bobby and his team members sit together in proximity to a trading floor for the investment advisory division of this company, Bobby is exposed to confidential information on a regular basis. While getting a cup of coffee, Bobby overhears two portfolio managers engaging in a discussion about some changes to the list of companies included in the IM Mutual Fund they manage. One of the portfolio managers describes her research findings and indicates that her conviction in XYZ Company is diminishing. She recommends the mutual fund changes its investment strategy by including New Corp instead of XYZ Company and mentions that she is going to bring the suggestion to the team meeting tomorrow and believes the Chief Portfolio Manager will support her decision but in the meantime asks her colleague to keep her plan quiet. New Corp is a growing company, developing lots of new products and will be a better fit for the IM Mutual Fund. Bobby and his sister Becky both own 1000 shares of XYZ Company. The stock was inherited from their grandfather. He does not follow the stock because fortunately Bobby has a great job and he is not relying on the stock appreciation. However, his sister Becky is a single mom and is really struggling. Selling XYZ Company stock at its peak price would be critical to Beckys financial situation. Bobby knows he cannot trade in client securities but XYZ Company is not a client and he does not plan on selling his shares. XYZ Companys common stock average trading volume is over 11,500,000 daily so Becky selling 1000 shares would not have any impact on the company financial health. What should Bobby do?
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