Material Information

The Securities and Exchange Commission (SEC) has jurisdiction with respect to the oversight and enforcement of insider trading laws, which were established to protect the integrity of, and promote investor confidence in, the securities market. These laws also prevent insiders from taking advantage of material information that has not been disclosed to other stockholders or the public.

Information is considered material if a reasonable investor would consider it significant to their decision to buy or sell a security. The test for materiality is a facts and circumstances test, there is no formal definition. However, information may be considered material if:

• A reasonable investor would want to know this information before making an investment decision.

• The information could reasonably be expected to affect the market price of a security. This means the information could be used to help an investor make a profit or avoid a loss.

Examples of material information include:

• Financial results or significant changes in operating performance

• Unanticipated or unusual events

• Guidance concerning future financial results

• Company plans to buyback or repurchase stock

• A change to the dividend policy

• Transactions such as disposition of assets, mergers, acquisitions, and joint ventures

• New contracts of significant value or lawsuits

SEC rules prohibit insiders from trading in a company's stock while in possession of material, nonpublic information. In this context, trading is broadly defined as:

• Buying and selling of any securities

• Acquiring or disposing of puts, calls and other derivatives

• Exercising stock options

• Transferring into or out of a fund containing company stock such as a 401(k) plan

• Making a gift or donating securities