Standard II(A)

Can anyone help me to understand the following paragraph? May be it’s a lack of knowledge or it might be that I’m not a native speaker, but I simply can’t follow and/or grasp the logic behind this:

Procedures concerning the restriction or review of a firm’s proprietary trading while the firm possesses material nonpublic information will necessarily depend on the types of proprietary trading in which the firm may engage. A prohibition on all types of proprietary activity when a firm comes into possession of material nonpublic information is not appropriate. For example, when a firm acts as a market maker, a prohibition on proprietary trading may be counterproductive to the goals of maintaining the confidentiality of information and market liquidity. This concern is particularly important in the relationships between small, regional broker/dealers and small issuers. In many situations, a firm will take a small issuer public with the understanding that the firm will continue to be a market maker in the stock. In such instances, a withdrawal by the firm from market-making acts would be a clear tip to outsiders. Firms that continue market-making activity while in the possession of material nonpublic information should, however, instruct their market makers to remain passive with respect to the market—that is, to take only the contra side of unsolicited customer trades.

It’s saying that if you do something weird when you’re in possession of material nonpublic information, that weirdness, in and of itself, will signal the market that something’s happening. For example, if you normally buy a given security as part of your market-making activities and you all of a sudden stop buying, the market can infer that you have information that buying that security is a bad idea (e.g., an extremely poor earnings report). The suggestion is that you don’t initiate any trades – in the example above you wouldn’t start selling the company’s stock like crazy – but you still accept normal trades that are offered to you (so if someone comes to you wanting to buy, then you’ll sell).