No this is not correct. If someone spreads a rumor and you don’t know that the information is from an authoritative source it’s not MNPI. It’s speculation.

If someone anonymously posts on Twitter that Splunk is going to get acquired by Cisco and you immediately buy options, and you don’t know who this Twitter account is, then it’s speculation. Also it’s no longer non-public information if someone posts it on Twitter.

"if someone posts it on Twitter."

Yes, if you trade on public information, then it's not material non public information.

It becomes public information when shared with the public, unintentionally or not. The specific kinds of relationships involved are a big deal. It’s fine to tell a waitress you closed a huge deal and she can even trade on it, but tell your wife and she can’t trade stocks on that information.

“insiders must be breaching a fiduciary duty owed to their corporation when they trade on or tip confidential corporate information. This stipulation almost always means that an insider cannot trade on such information and cannot tip others about it if the insider stands to gain by doing so. https://sloanreview.mit.edu/article/when-is-it-legal-to-trad...

In the case where an unrelated outsider overhears the information that’s public disclosure. And the information no longer needs to be treated by random people as non-public.

disagree, the SEC has lost a lot of cases on this idea

if you’re not affiliated with the company and simply overhear and trade, make enough to retain a lawyer real quick

Oh, no doubt. There will be an investigation looking for a relationship.

The SEC has very specific rules and even specific form [1] they must file when companies release information like this.

[1] https://www.sec.gov/forms

So if the founder goes on TV and announces their merger then it’s nonpublic information until they file the form? Everyone who trades on that is insider trading? That can’t be right.

Right but - that means the company employee gets in trouble for making the information public (via announcing it in public at the bus stop) - not that I would get in trouble for hearing it and acting on it, right?

Those rules regulate the company, not random people at a bus stop.