Soliciting Nonpublic Material info


Is soliciting non public material info a breach? In some cases it seems that it is but in other it is not. My guess is acting on the info is a breach but soliciting is not. Anyone can confirm?


Why would you solicit non-public material information? If you ask for it, then it is in order to act on it supposedly…

Both soliciting and providing non-public material would be considered a violation to the code.

Thanks for your feedback. Sorry I may not have been clear. You would solicit to act on it. However, what if the person you are soliciting it from does not provide the material non public info. I was wondering if the act of soliciting (even if not successful) was a breach of the standard or if soliciting is irrelevant and we should only consider whether someone acts or help someone else to act on non public material info.

The code assumes CFAI members does not solicit material non-public info, so the code explicitly prohibits to act on that info. On the ulterior case, the damage to the investment market resides on using material non-public information for trade purposes. It is the equal to corruption in a competitive market… destroys fair competitiveness.

For example, banks could ask its clients for non-public material information for credit analysis purposes. Most companies won´t deliver such information, however will provide enough info for a proper analysis or would sign strong NDAs. The thing is that an agent working for private funds, investment firms, investment banks, stock exchanges, or even regulators are not meant to ask for non-public material info before it is public, and the company asked should have enough firewalls to comply with this.

Summing up, it is ethical to not snoop around and do not act on sensible info if it is not released publicly yet.

Makes sense. Thank you for your input!

On this topic, keep in mind the Mosaic Theory. You could solicit, or stumble upon, info that is not by itself material. It could prompt deeper analysis, or you could combine it with public info and get something material. A classic example is you go skiing and find yourself on the lift line behind two people. The CEO of Company A who you are sure of, and the CFO of Company B who you think you recognize. If you aren’t 100% sure who one of them is, you later ask his name.

Then, you go to your computer and start digging. Company A looks like a fine choice to buy Company B.