What actions should a CFA charterholder avoid when handling nonpublic information?

A CFA charterholder must adhere to strict ethical standards regarding the handling of nonpublic information to prevent misuse and ensure market integrity. The correct response encompasses the broad range of improper actions that can arise from mishandling nonpublic information.

When retaining nonpublic information for personal gain, a charterholder risks violating securities laws and ethical guidelines. The essence of the CFA Institute's Code of Ethics is to promote trust within markets, and personal gain undermines that trust.

Sharing nonpublic information indiscriminately with colleagues is similarly inappropriate. Each individual must evaluate the relevance and materiality of the information and limit sharing to those who have a legitimate need to know, thus safeguarding the information from wider dissemination which could lead to insider trading situations.

Making trades based on nonpublic information directly breaches regulations regarding insider trading, which can lead to severe penalties not only for the individual but also for the organization, damaging its reputation and standing in the market.

Therefore, recognizing all of these actions as unethical highlights the encompassing nature of the responsibility placed on CFA charterholders regarding nonpublic information, which is foundational to maintaining ethical standards within the investment profession.