Material Non-Public Information

CFA Level III
#1

What if an analyst is made aware of some material non-public information but in the course of “traditional research” comes to the same conclusions that he would have come to using the material information. Can he still publish a research report with his recommendation excluding the material info?

#2

i would go with no – in possession of non-public material info that would move the mkt; too border line for cfa

#3

When in doubt, talk to your compliance officer.

#4

I’d say so long the recommendation has reasonable basis, it can be still be published. However, II(B) requires the best effort to disseminate the non-public material information, once known. - sticky

#5

Yes, if he had independent, verifiable research and documentation that backs up the same conclusion via Mosaic Thoery then yes he can act on it, as long as he didnt use the Material non-public info to arrive at that conclusion or lead him in that direction…

#6

i know cfa is far from real world - but in a major investment bank, that analyst would be fired thought mosaic theory involved non-public, non-material information - - think if you have material non-public info, you should try to get it disseminated, if you can’t, you can’t publish why am i hazy on mosaic theory?

#7

Cvillecfa you are right about Mosaic, but it states he doesnt use the Materical Non-public and arrives at the same conclusion not using the stuff, its a slippery slope.

#8

There is a question on this in V1 Afternoon 2. Analyst cannot trade even though they formed conclusion using mosaic theory and subsequently got inside information leading to the same conclusion.

#9

i would still say je can’t use the info, that he should have another analyst write the research report and he should bee taken off the project… think about it, if you have the material non public info, you know the result of the stock (if it will increase or decrease in value)…with that knowledge you could take a bunch of facts and call it the “Mosaic theory” that rendered your outcome…

#10

i guess to be on the safe side it should be no b/c people could infer and also he could of been exhiting data-mining bias…trying to find the data to support teh Material Non-public info to say he reached teh saem conclusion on his own…tricky