This module is part of the 2027 curriculum. You are following the 2026 curriculum, where it is not taught in this form. Switch if you are sitting the exam under the 2027 curriculum.
Lesson 1 of 1 · 15 min
Standard II: Integrity of Capital Markets
Markets only work if no one trades on secrets or fakes prices: never act on material nonpublic information, and never distort prices or volume to mislead.
In short
- II(A) Material Nonpublic Information: if you hold information that is both material and nonpublic, you must not trade on it or cause anyone else to trade (tipping counts, even if the person never trades).
- Material: would likely move the price, or a reasonable investor would want it. Reliability of the source and clarity of the price effect matter.
- Nonpublic: not yet disseminated to the market in general. Telling a room of analysts does not make it public.
- Mosaic theory: conclusions built from public information plus nonmaterial nonpublic pieces may be acted on, even if they would be material had the company said them outright.
- II(B) Market Manipulation: no false information and no transactions intended to mislead about price or volume. Intent decides; legitimate strategies are fine.
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