Jennifer, works as an analyst for XYZ.Recently, she presented to the company's investment committee, her completed research report on a company called Zebra Management Inc. Her recommendation to the investment committee is to "sell" all holdings of Zebra Management Inc. across the board.After much debate about Zebra Inc. the Investment Committee of XYZ reaches a consensus that is contrary to what Jennifer is recommending, not to sell its holdings of Zebra in its funds. Their reason was that Zebra has produced dividends on a consistent basis.

The committee's decision has placed Jennifer in an awkward position. She has to make a presentation at a meeting that is open to the company's (XYZ) clients and its management.

Unknown to Jennifer, at the time she wrote the original report on Zebra Management Inc., a private equity firm, Garcon's, indicated its intent to take over Zebra Management Inc. On the day of XYZ`s general meeting this news becomes public. Zebra Management Inc.'s shares increase 20 percent in value in the course of a day. The clients are very happy with the news and the management of XYZ is pleased at their foresight not to sell their shares in Zebra. Jennifer however, remains very skeptical of the takeover, but does not say anything at the meeting, nor during her presentation, because she wants to remain loyal to her employer.She does what the company has asked her to do and that is not to compromise their holdings in Zebra Management Inc. In other words, she delivers the company line.However, in her mind she doubts that the Garcon's board fully understands the industry and the role that Zebra Management Inc. plays.

Shortly after the meeting Jennifer writes an updated report to XYZ's investment committee, the updated report includes the new information of the takeover bid by Garcon's but again she repeats her "sell" recommendation.

That evening, Jennifer wonders what she should do regarding the 5,000 shares of Zebra Management Inc. that are held in her husband's personal account.XYZ's Company policy on personal investments and trading requires that Jennifer obtain prior approval from the Company`s compliance department before she makes any trades in securities that she has researched.She is concerned that if XYZ accepts her recommendation to sell Zebra Management Inc., the stock price will drop very suddenly. Jennifer comes up with a plan. She decides to use derivatives to hedge her husband's position in Zebra Management Inc. because derivative trades are not covered by the company`s policy and she will not need prior approval from the compliance department.

The next morning, on Jennifer's recommendation, XYZ's traders sell their company's entire position of Zebra Management Inc. for a sizable profit. Their fund`s performance rebounds.

Several weeks later, Garcon`s cancels the deal and Zebra Management's stock price declines by 20 percent. Jennifer's derivatives position effectively hedges her husband's position in the stock, and her husband`s portfolio gains substantially in value.

1.In point form list all the activities or actions that are unethical in this case. (6 marks)

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2.In point form, outline what Jennifer did correctly as far as ethical behaviour is concerned(5 marks)

3.If you were Allison's friend at work and you knew what she had done, explain to her that what she has done is wrong and tell her what you will have to do.Assume you are a CFA.

(4 marks)