Lesson 2 of 5 · All lessons in this module
This lesson 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 2 of 5 · 15 min
Standard II(A) cases: material, nonpublic or mosaic?
Run every II(A) vignette through two gates, material and then nonpublic, and ask where each piece came from: analysis built from public and immaterial pieces is fine, one material nonpublic piece is not.
In short
- Material means the information would probably move the price or a reasonable investor would want it. Specificity, difference from what is public, nature and source reliability decide.
- A weak source or an unclear price effect usually means not material; a guess from someone with no link to the issuer is the classic example.
- Nonpublic lasts until the information reaches the market in general. A private meeting with a few holders, a call with a few analysts or a private gloss on a public filing does not publish it.
- Mosaic theory lets an analyst act on a conclusion drawn from public and nonmaterial nonpublic pieces, even when the conclusion would have been material if the company had said it. One material nonpublic piece breaks the defence.
- Data supplied for due diligence (a loan, deal, rating or offering) may be used for that purpose only, never to trade or to tip.
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