The Chief Commodity Trader for a Large Energy Company Learns

question 199

Multiple Choice

The chief commodity trader for a large energy company learns from a friend that a competitor will likely fail its upcoming regulatory audit and will be forced to temporarily decrease production. If the information is true, the trader has short-term opportunities to make trades that will financially benefit the trader's company and will lead to a substantial increase in the trader's performance bonus. However, if the information is not true, making the trades will significantly increase the company's risk of being caught in a long position. From an ethical perspective, which of the following would be the most appropriate course of action for the trader to take?

• A) Make the trade because the company and the trader will both benefit.
• B) Have another trader on staff make the trade in order to avoid a conflict of interest.
• C) Disclose the information to the risk oversight committee but proceed with the trade to capitalize on the opportunity.
• D) Defer the decision to management and risk the loss of the trading opportunity.

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Definitions:

Social Science

The scientific study of human society and social relationships, encompassing disciplines like psychology, sociology, and anthropology.

Psychiatry

A branch of medicine focused on the diagnosis, treatment, and prevention of mental, emotional, and behavioral disorders.

Opinion

An unsubstantiated belief in or conclusion about what seems to be true according to an individual’s personal thoughts.

Concrete Evidence

Concrete evidence refers to tangible, specific proof that leaves little room for doubt or questioning in the context it is presented.