Suppose that you and a close friend are employed by the same accounting firm. You are assigned to the firm’s audit staff, while your friend is a consultant who works on M&A engagements. What would you do under the following circumstances?
(1) Your friend discloses to you highly confidential “market-moving” information regarding a soon-to-be announced merger;
(2) Your friend not only discloses such information to you but also informs you that he or she plans to use it to make a “quick” profit in the stock market? In your responses, comment on your ethical responsibilities in each scenario.