Which action violates the duty of confidentiality by using confidential information to trade?

Which action violates the duty of confidentiality by using confidential information to trade?

• A. Disclosure with consent
• B. Misappropriation
• C. Return of documents
• D. Non-disclosure

Answer: (B)

Using confidential information to trade breaks the obligation to keep information confidential by turning what you know into personal gain. When you’re entrusted with confidential information, there’s a duty not to exploit it for your own advantage in the market. Acting on that information to trade is a misappropriation of the information and often falls under insider trading rules. Disclosing with consent is allowed if the consent is valid; returning documents simply ends possession without using the information for trading; and non-disclosure is about keeping the information secret rather than using it to trade. Thus, the action that violates the duty of confidentiality by trading on confidential information is misappropriation.

Using confidential information to trade breaks the obligation to keep information confidential by turning what you know into personal gain. When you’re entrusted with confidential information, there’s a duty not to exploit it for your own advantage in the market. Acting on that information to trade is a misappropriation of the information and often falls under insider trading rules.

Disclosing with consent is allowed if the consent is valid; returning documents simply ends possession without using the information for trading; and non-disclosure is about keeping the information secret rather than using it to trade. Thus, the action that violates the duty of confidentiality by trading on confidential information is misappropriation.