You are the manager responsible for the engagement to review the financial information of Riff Ltd (Riff) on behalf of an external audit client, Alto plc (Alto), a listed company. Alto requested the review as it intends to acquire the share capital of Riff. The audit junior currently working with you on the review engagement told you that, yesterday, he purchased shares in Alto because he believes its share price will rise when the acquisition of Riff is announced. He also told you that he has informed his parents about the acquisition and has advised them to purchase shares in Alto.

Requirement(a) Explain the ethical issues arising in this situation, and (Team 8) (b) State the actions you and your firm should take.