Financial Risk Manager Part 1

The Global Association of Risk Professionals (GARP) has a strict Code of Conduct that its members are expected to adhere to. This Code of Conduct includes a requirement that members should not commit any act that compromises the integrity of GARP or the FRM designation. This includes not knowingly participating or assisting in any violation of the Code or laws. Furthermore, members are not allowed to make use of their employer or client's confidential information for inappropriate purposes or personal use. In this scenario, John Philip is clearly violating these rules by sharing confidential information with an outsider for personal gain. As a fellow FRM and member of GARP, Jack Simpson has a responsibility to report this violation to their employer. By doing so, he would be upholding the integrity of the FRM designation and the GARP Code of Conduct. Ignoring the violation or trying to punish John Philip himself would not be in line with the GARP Code of Conduct. Therefore, the correct action for Simpson to take is to report John Philip's activities to their employer.

Choice A is incorrect. Simpson, despite being an FRM holder, does not have the authority to bar John Philip from using the FRM designation. This power lies with the Global Association of Risk Professionals (GARP), which can revoke a member's designation if they are found to be in violation of its Code of Conduct.

Choice B is incorrect. According to GARP's Code of Conduct, all members are obligated to uphold professional integrity and report any unethical behavior they witness within their organization. Ignoring such actions would be a breach of this code.

Choice C is incorrect. The fact that the company's confidential information is being used by an outsider for personal gains only does not absolve John Philip from his misconduct. As per GARP's Code of Conduct, sharing confidential information without proper authorization itself constitutes a violation irrespective of how it's used.