I’m a fund manager. I’ve done COMPREHENSIVE research about GM, and I like the share. I plan on buying the share tomorrow. Later today, at a restuarant, I overhear two GM executives talk about a new fast car that they are about to launch. The launching of this car will increase GMs profits. Am I allowed to buy the share as planned? Does the fact that I now have MNP override my initial research?
You should be able to buy. There should be no violation. Now, another twist to the question would be if i hear them talk about some unexpected losses to be announced in a few days. Based on that if i don’t buy, would it be a violation?
jimmykaw Wrote: ------------------------------------------------------- > You should be able to buy. There should be no > violation. > > Now, another twist to the question would be if i > hear them talk about some unexpected losses to be > announced in a few days. Based on that if i don’t > buy, would it be a violation? I d buy 1 share. lol
Is this the Mosaic theory argument. I think the idea is that if the information that you got was non public but also NON material. Then its okay to proceed. Not sure if the either of these would be considered Non Material. The Losses, definately not (IMHO)
deepstack31 Wrote: ------------------------------------------------------- > Is this the Mosaic theory argument. I think the > idea is that if the information that you got was > non public but also NON material. Then its okay to > proceed. > > Not sure if the either of these would be > considered Non Material. The Losses, definately > not (IMHO) not in this case… analyst actually HEARD what they are talking about.
Aaaah, so its okay to see two CEO’s playing golf and assume that its Nonmaterial? Also I’m sure I did a question where this Analyst called up the supplier of a Company’s stock which he covered, and the supplier gave him some information about installing a new inventory system. And Shwaeser argued that it was non material !
The information you heard was certainly material and therefore you can’t act either way on the stock before public dissemination. The amount of time you’ve spent researching is irrelevant. Just seeing them speaking, as someone else said, would fall under mosaic, but this does not.
No, you cannot buy the stock.
Correct, you cannot buy it. And to answer the other question, you have to ACT to commit a violation. Therefore, if you were planning on buying the stock, but you hear them talking about losses, and then DON’T buy the stock, you have NOT committed a violation.
The analyst seems to be a papparazi… 
well you can always pretend like you didn’t overhear them. Then you are not in violation
ZeroBonus Wrote: ------------------------------------------------------- > well you can always pretend like you didn’t > overhear them. Then you are not in violation You violate one more standard: I(D) Misconduct. Dishonesty.