Expert Call Compliance: Avoiding MNPI and Staying on the Right Side of Regulations

Expert network calls are invaluable for investment research. They're also potential compliance landmines. One careless question or unguarded answer can cross the line from legitimate research into material non-public information (MNPI) territory.

This guide covers practical approaches to expert call compliance—not to replace legal counsel, but to help research teams understand the landscape and implement reasonable safeguards.

The Regulatory Framework

What Constitutes MNPI

Material non-public information has two components:

Material: Information that a reasonable investor would consider important in making an investment decision. This includes:

• Unannounced earnings or revenue figures
• Pending mergers, acquisitions, or major contracts
• Significant management changes
• Product launches or regulatory decisions
• Major customer wins or losses

Non-public: Information not generally available to the market. Even if widely rumored, information isn't public until officially disclosed.

The intersection creates risk. A semiconductor supplier mentioning "a major customer just doubled their order" might be sharing MNPI about a publicly traded company.

Regulatory Scrutiny

The SEC has brought numerous cases involving expert networks. Common patterns include:

• Experts sharing confidential information from current employers
• Analysts soliciting specific non-public data points
• Hedge funds building positions based on expert tips
• Inadequate compliance procedures and documentation

Enforcement has increased, not decreased, over time.

Common Compliance Pitfalls

Questions That Cross Lines

Some questions inherently seek MNPI:

• "What were your company's sales last quarter?" (before announcement)
• "Is the acquisition going through?" (before announcement)
• "How many units shipped this month?" (specific current data)
• "What's the board discussing about the CEO?" (confidential deliberations)

Even indirect versions can be problematic: "Are sales tracking better or worse than last quarter?" still seeks material non-public guidance.

Expert Oversharing

Experts sometimes volunteer problematic information:

• Recent confidential meetings
• Internal forecasts or projections
• Customer-specific data from current employer
• Pending decisions not yet announced

The compliance burden isn't only on analysts—it's on recognizing and stopping problematic disclosures.

Documentation Gaps

Compliance failures often involve inadequate records:

• No documentation of what was discussed
• No evidence of compliance warnings given
• No audit trail of information received
• No process for escalating concerns

When regulators investigate, documentation—or its absence—matters enormously.

Building a Compliance Framework

Pre-Call Procedures

Expert vetting: Verify expert backgrounds. Understand current employment and potential conflicts. Experts with access to MNPI about covered companies require extra caution.

Question review: Prepare questions in advance. Review for MNPI risk. Some firms require compliance pre-approval for sensitive topics.

Disclosure scripts: Standard language at call start:

• Reminder that MNPI should not be shared
• Clarification of expert's role and limitations
• Request to stop if uncomfortable topics arise

During-Call Monitoring

Real-time awareness: Analysts must recognize problematic territory:

• Specific current financial metrics
• Confidential strategic decisions
• Information that could only come from insider access

Active intervention: When experts veer toward MNPI:

• Interrupt politely but firmly
• Redirect to appropriate topics
• Document that the intervention occurred

Topic boundaries: Some areas are generally safe:

• Industry trends and dynamics
• Historical context and experience
• General market observations
• Publicly available information interpretation

Post-Call Documentation

Complete records: Every call should have:

• Full transcript or detailed notes
• Record of compliance warnings given
• Documentation of any concerning moments
• Clear indication of information sources

Escalation procedures: Defined process when concerns arise:

• Who reviews flagged conversations
• How quickly review must occur
• Documentation of review decisions
• Actions if violations identified

Technology's Role in Compliance

Real-Time Monitoring

Modern tools can flag potential issues during calls:

Topic detection: Identifying when conversation enters sensitive territory—specific financial metrics, confidential processes, insider-only knowledge.

Keyword alerts: Triggering warnings on terms that often precede MNPI—"the board decided," "we're about to announce," "between us."

Visual indicators: Providing analysts visible cues when risk levels increase, enabling proactive redirection.

Automated Documentation

Complete call documentation serves multiple purposes:

Contemporaneous records: Transcripts provide evidence of exactly what was said, not reconstructed memories.

Searchable archives: Ability to query historical calls for specific topics or concerns.

Audit readiness: Complete records available if regulators request documentation.

Pattern identification: Analyzing across calls to identify systematic concerns.

Audit Trail Maintenance

Compliance requires not just good behavior but provable good behavior:

• Timestamped records of all interactions
• Documentation of compliance procedures followed
• Evidence of training and policy acknowledgment
• Records of escalation and review processes

Training and Culture

Analyst Training

Effective compliance training covers:

Regulatory framework: Understanding why rules exist and consequences of violations.

Practical scenarios: Working through realistic examples of compliant and non-compliant conversations.

Recognition skills: Developing instincts for when conversations approach problematic territory.

Response protocols: Knowing exactly how to respond when issues arise.

Expert Education

Experts also need guidance:

Scope clarity: Understanding what information is appropriate to share.

Employer obligations: Recognizing continuing duties to current and former employers.

Boundary setting: Feeling empowered to decline inappropriate questions.

Organizational Culture

Compliance must be embedded in culture:

Tone from top: Leadership emphasis on doing things right, not just avoiding getting caught.

Psychological safety: Encouraging escalation without fear of consequences for raising concerns.

Process integration: Compliance as natural part of workflow, not separate burden.

Expert Network Provider Role

Provider Due Diligence

Reputable expert networks implement their own safeguards:

• Expert background verification
• Conflict screening
• Compliance training requirements
• Monitoring and review processes

Understanding provider procedures helps assess residual risk.

Shared Responsibility

Compliance is shared between investors, experts, and networks:

• Networks screen and train experts
• Experts respect confidentiality obligations
• Investors conduct appropriate research within boundaries
• All parties document and escalate concerns

No single party can ensure compliance alone.

When Things Go Wrong

Identifying Violations

Signs that MNPI may have been received:

• Specific non-public financial data shared
• Confidential strategic information disclosed
• Expert acknowledged sharing shouldn't occur
• Information proved accurate when later announced

Response Protocol

If potential MNPI received:

1. Stop immediately: End problematic discussion
2. Document thoroughly: Record exactly what was said
3. Escalate promptly: Notify compliance immediately
4. Restrict information: Limit who knows what was shared
5. Seek guidance: Legal and compliance review
6. Consider implications: Trading restrictions may apply

Regulatory Cooperation

If regulatory inquiry occurs:

• Preserve all relevant records
• Engage appropriate counsel
• Cooperate appropriately with investigation
• Document cooperation efforts

Best Practices Summary

Before calls:

• Vet experts for conflicts
• Prepare and review questions
• Use standard compliance disclosures

During calls:

• Monitor for sensitive topics
• Intervene when necessary
• Focus on appropriate information

After calls:

• Document completely
• Review for concerns
• Escalate issues promptly

Ongoing:

• Train regularly
• Update procedures
• Audit compliance

Technology Investment

Modern compliance requires modern tools. Manual processes can't keep pace with call volume and regulatory expectations.

Effective technology provides:

• Real-time topic monitoring
• Automatic documentation
• Searchable archives
• Audit trail maintenance
• Pattern analysis

The investment in compliance technology is small compared to the cost of violations—financial, reputational, and personal.

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InsightAgent provides real-time compliance monitoring and complete documentation for expert calls. Learn how we help investment teams stay compliant.