Material nonpublic information | Mosiac Theory

Standard II A) Material nonpublic information

Through mosiac theory a research analyst can gather public and non-material nonpublic information and subsequently form conclusions / recommendations that would otherwise “have been material inside information had they been communicated directly to the analyst by a company.”

So does that mean ONLY this particular analyst is allowed to use this information to provide recommendations to clients and or/ for investment action? OR is he/she allowed to distribute this new information to a select few and still be within the code of professional conduct since the information has been construtcted by means of mosiac theory?

Appreciate any help on this subject!

Once the analyst forms an opinion using the mosaic theory they are free to publish their opinion. However remember selective dissemination is a violation of the standards.

Thanks Spranga5. In light of the paragraph in quotation marks below, I would assume it is perfectly acceptable to create nonmaterial nonpublic information for the use of client investment, even if this information is kept a secret by those particular clients, i.e. not revealed to the public?

I am just slightly confused as to once this material nonpublic information is produced, what an analyst can or cannot do with this information?

“In the course of their work, analysts actively seek out corporate information not generally known to the market for the express purpose of analyzing that information, forming an opinion on its significance, and informing their clients, who can be expected to trade on the basis of the recommendation.”