The Securities Exchange Commission created a final rule to address three issues: the selective disclosure by issuers of material nonpublic information; when insider trading liability arises in connection with a trader's "use" or "knowing possession" of material nonpublic information; and when the breach of a family or other non-business relationship may give rise to liability under the misappropriation theory of insider trading.

The SEC believes that the practice of selective disclosure leads for investors to lose confidence in the integrity of capital markets. When investors notice drastic changes in the stock price to later be provided the information that could have signify an investment decision leads to question if investors are making decisions with a fair amount of information. Advance information such warning of earning and a non full disclosure fact added, leads to unfair profits or avoidance of a loss at the expense of the ones not knowing the information.

It is important to note that information is considered "material" is if a "substantial likelihood that an investor will consider the information important to make decisions" and that is where the it gets challenging because materiality have been based on circumstances, facts and judgment which has complicated matters.

1. Find a case and summarize the situation

2. What was the outcome of the investigation?

3. Was the selective disclosure considered intentional or unintentional?

4. How could it have been avoided?