Material Non-Public Information
Material non-public information, or MNPI, refers to confidential details about a company that has yet to be publicly disclosed. This information can be critical, potentially causing significant swings in the company’s stock price if revealed, such as mergers, acquisitions, unexpected losses, or internal knowledge of a government investigation into the company’s practices.
Examples of MNPI
Material Non-Public Information (MNPI): A company is about to announce a technological breakthrough that could significantly increase its stock price. This information is not yet public knowledge, but it certainly would be material (important) to investors deciding whether to buy or sell the company’s stock.
Public Information: That same company’s latest quarterly earnings report would be considered public information. This information is readily available to anyone through press releases, financial news websites, or the company’s investor relations page.
Insider Trading and MNPI
Insider trading is illegal and hinges on using MNPI to gain an unfair advantage in the market. Using nonpublic information to trade in the company’s stock before the launch is a violation if securities law.
MNPI and Whistleblowing
Whistleblowers frequently encounter MNPI in their daily work. This information can be vital in exposing corporate misconduct, such as accounting fraud, safety violations, or securities issues. Whistleblowers should report their concerns to regulatory agencies or utilize internal company channels designed for such reports. These channels often have safeguards in place to protect whistleblowers.
