Upon becoming aware of insider trading, what action should a registered representative (RR) take?

When a registered representative becomes aware of insider trading, contacting the supervisor immediately is the appropriate action to take. This ensures that the situation is escalated within the firm to the appropriate personnel who are trained to handle such matters.

By reporting to the supervisor, the firm can initiate an internal investigation and determine the best course of action to comply with regulations and protect the interests of clients and the firm. This step is crucial because insider trading is a serious violation of securities laws, and firms must adhere to strict protocols for handling such incidents to mitigate legal and financial repercussions.

The supervisor can then decide whether to escalate the matter further, including notifying regulatory agencies or appropriate law enforcement, depending on the nature and severity of the information received. This hierarchical reporting system helps maintain compliance with regulations regarding insider trading and facilitates a coordinated response to the issue.