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Yup. How is this an ethics question?
Thier IP was leaked , 2clients data breached.
The firm needs to plug the hole and scrub for any residue (Trojan horses and back doors).
A breach is not itself a reflection of the associate’s conduct so shouldn’t be damming itself (lots of no fault ways of being compromised). Identifying the how is important.
And if the associate was intentionally compromising then they get their come-up’ns