Harriet Moore is an accountant for New World Pharmaceuticals. Her duties include

Question

Harriet Moore is an accountant for New World Pharmaceuticals. Her duties include tracking research and development spending in the new product development division. Over the course of the past six months, Harriet notices that a great deal of funds have been spent on a particular project for a new drug. She hears "through the grapevine" that the company is about to patent the drug and expects it to be a major advance in antibiotics. Harriet believes that this new drug will greatly improve company performance and will cause the company's stock to increase in value. Harriet decides to purchase shares of New World in order to benefit from this expected increase. <?XML:NAMESPACE PREFIX = O />

1. What are Harriet's ethical responsibilities with respect to the information she has learned through her duties as an accountant for New World?

2. What are the implications to her planned purchase of New World shares?

Explanation / Answer

1. I believe Harriet's ethical responsibilities are to not trade based on non-public information. What Harriet is doing is called insider trading, something that Harriet Moore was convicted for. Harriet should not trade based on information that has not been released to the general public. I believe this because this she is a key employee in the company who has an unfair advantage.
2.Harriet is anticipating a jump in the market price, and would likely sell her shares to make a great deal of money. I do not believe she would invest in the shares if she did not think that the new drug was going to be a huge hit. If Harriet was not a key employee in the company, she would not be doing anything wrong. However, she knows how much has been spent on this drug, and that the grapevine statement is likely correct.

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