Ethical Dilemma?

Question

You are an engineer, but you are not working on your company’s Department of Transportation (DOT) project.

One day you overhear a conversation in the cafeteria between the program manager and the project engineer that makes you reasonably sure a large contract will soon be given to the ABC Company to develop and manufacture a key DOT subsystem.

ABC is a small firm, and its stock is traded over the counter.

You feel sure that the stock will rise from its present $2.25 per share as soon as the news of the DOT contract gets out.

Would you go out and buy ABC’s stock?

1. Are you following the rules that are understood & accepted?

2. Are you comfortable discussing & defending your actions?

3. What if everyone acted this way?

4. Are there alternatives that rest on firmer ethical ground?

Answer 1

Presuming you work for ABC, then it would be considered insider trading if you bought stock based on that information in advance of the public's knowledge.

http://en.wikipedia.org/wiki/Insider_tra...

Answer 2

It is insider information and it is illegal. You came by your information because you work for a company that is involved in the contract whether you are personally working on it or not.

Basically, if it is not public information you are in the wrong.

Answer 3

If you do not work for ABC or for DOT and if you do not already have a 5% stake in any of those companies, you should be fine.

You would be violating the essence of the rules, but from a legal sense you should be okay.