Ethics - Material non public informaiton

Just gone through the sample questions for book one and one question was asking whether or not this guy has broken the rule by buying a stock when overhears a update from analyst (no public disclosed) upgrade a similar company in the same industry. I am not quite sure how is the matrial given the recent events say JPM is going up while MS is goind down. Any suggestions!!

I think it’s lack of reasonable basis.

Info is not material – would not impact firm’s valuation if disclosed publically. Mosaic theory may apply. However, if the trade was made in the management of clients’ funds, the lack of reasonable basis would definitely apply.

my intuitive 2 cents, is that it deponds on the relationship between the two companies. Whether the upgrade of JPM is a result of MS’s performance or any other consequences, it might be a material non public information. I agree with both ‘maratikus’ and ‘newsmaker’ that apparently this is a breach of reasonable basis and even not so, I back up the idea of consider Mosaic Theory.