Please answer as soon as possible.

Cates Rental, an automobile rental company, has been profitable since its first year of operation in 2010 and the market price of the stock has tripled since going public in 2013. The company was hit by the surged fuel costs and the profit dropped sharply in 2021. The company is a defendant in a $900 million class-action lawsuit. The legal counsel of the company has advised that its likely that the company will lose the lawsuit and the compensatory damages awarded to the plaintiffs are estimated to be $500 million. 10 days before the fiscal year-end, the CEO, Brian Brown had a conversation with the controller, Paul Cook, in Brians office. The companys net income before reporting the potential loss (contingent loss) from the litigation is $100 million. To avoid a dramatic decline in stock price due to distributing bad news to the investors, Brown proposed not to disclose the information of the lawsuit to the public.

Is this proposal ethical? Indicate the circumstances that a contingent liability and contingent loss from a lawsuit should be reported on the financial statements and the circumstances that they should be disclosed in the notes to financial statements. What should you do if you were Paul?