Material Nonpublic Information (MNPI)
Significant, undisclosed company information that would affect the stock price if made public.
What is MNPI?
Material nonpublic information (MNPI) is information about a company or security that is both material — meaning a reasonable investor would consider it important in making an investment decision — and has not been publicly disclosed. Examples include unreleased earnings results, undisclosed merger negotiations, clinical trial outcomes, regulatory decisions, and major contract wins or losses. Trading securities on the basis of MNPI, or tipping others who then trade, constitutes insider trading under Rule 10b-5 and carries both civil and criminal penalties. Materiality is assessed objectively: information is material if there is a substantial likelihood that its disclosure would have significantly altered the total mix of information available to investors.
Example
A pharmaceutical company's CFO learns that a pivotal drug trial failed before the results are publicly disclosed. Trading the company's shares or options before the announcement — or tipping a friend who then trades — constitutes insider trading on MNPI. When the failure is announced and the stock drops 40%, the SEC can establish both materiality (significant price impact) and the nonpublic status at the time of trading.
Source: SEC — Insider Trading