Use of Material Nonpublic Information for Insider Trading

What this video covers

• What material nonpublic information (MNPI) means and why the general antifraud rule applies to any person, not just registered broker-dealers
• The three general antifraud prohibitions, including when an omission becomes misleading and unlawful
• Why the general antifraud rule requires a purchase or sale of a security, including the no-trade exam trap
• The three listed circumstances creating a duty of trust or confidence: an agreement, a history of sharing confidences, and a family source
• Why the misappropriation rule covers both trading on MNPI and communicating it to someone else, and why the list of duty circumstances is open
• The four statutory family relationships and the two-part rebuttal available only under the family-source branch
• Why broker-dealers need written, reasonably designed procedures scaled to their business and covering associated persons, even when no misuse or trade occurs