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IAI Actuarial Core Principles · Business Management · Professionalism and ethics case studies

Meera, a consulting actuary, is reviewing reserves for a general insurer client. While doing so she learns that a listed company, in which she holds shares, is about to be acquired by the client, an event not yet public. Which action best reflects her professional obligations?

Meera must keep the information confidential, refrain from trading in the shares, and disclose her shareholding to the client if it creates a conflict. Using or passing on non-public client information for personal benefit, whether buying or selling, breaches confidentiality and integrity.

  1. ABuy more shares quickly, since the information came from legitimate work
  2. BTell her family so they can decide on their own investments
  3. CKeep the information confidential, avoid dealing in the shares, and disclose her holding to the client if it creates a conflictCorrect
  4. DSell her shares immediately to avoid any loss, using the confidential information
  5. Publish a note to colleagues about the acquisition to ensure transparency

Explanation

Confidential client information must not be used for personal gain or passed to others. Trading on it would be misuse and may breach securities law. She should keep it confidential, refrain from dealing, and manage any conflict through disclosure to the client.

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