Before reading this article, please take the following multiple choice quiz: (1) You are the Chief Executive Officer (CEO) of Marsha Tudor Styles, Inc. (MTS), one of the country’s largest retailers of products for homemakers. Your company is highly profitable and closely identified with its founder and Chairman of the Board of Directors, Marsha Tudor, who publishes a magazine and hosts a television show concerning homemaking. Recently, the Securities and Exchange Commission (SEC) investigated Tudor for suspected insider trading for selling one million dollars of stock in a company owned by a personal friend, just before a sharp decline in the price of its stock. In the course of her voluntary cooperation with the investigation, Tudor stated that she sold the stock pursuant to a pre-established stop-loss order. When news of the investigation became public, Tudor asserted her innocence of insider trading on a national news program. Although Tudor has not been charged with insider trading, she has been indicted for obstruction of justice for telling federal investigators that she sold her stock pursuant to a stop-loss order, and for securities fraud for attempting to prop up the value of MTS stock by falsely proclaiming her innocence to the public. You have known Ms. Tudor for many years and tend to believe that she is innocent of the charges, although you cannot be entirely sure. In this situation, which of the following constitutes the ethically appropriate action for you to take in your capacity as CEO?
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