The scuttlebutt craft taught in the Phase 8 deep dive draws the boundary correctly and does it without statute names. Here are the names.
What does mosaic theory allow an analyst to do?
Mosaic theory holds that an analyst may assemble non-material public information and non-material nonpublic information into a conclusion that is itself material, and may act on that conclusion. The United States position is explicit: the SEC said so in the adopting release for Regulation FD, and the theory survives because neither theory of 10b-5 liability is engaged. Nothing was misappropriated, because each tile was either public or immaterial and was given without breach. Nobody was defrauded, because there is no duty attached to a fact that is not material.
The Indian position reaches the same place by a different route. Regulation 4 prohibits trading while in possession of unpublished price sensitive information, and the two-limb definition means a fact that fails the materiality limb is not that information at all. An analyst who visits fourteen dealers and asks each about sell-through is collecting fourteen immaterial facts. The weighted estimate he builds from them is material and it is his, in the way an opinion is its author's.
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Worked example: a dealer-check mosaic
Put the arithmetic where it can be checked. Fourteen dealers across four buckets, weighted by their share of national revenue: metro-large at 0.31 reporting sell-through up 14.0 percent, metro-small at 0.12 up 6.0, tier-2 at 0.39 up 9.0, and rural at 0.18 up 2.0. The weighted estimate is 8.93 percent against consensus of 7.0, a gap of 1.93 percentage points. The unweighted average of the four buckets is 7.75 percent, which is a different and worse number, and the difference between 8.93 and 7.75 is the analytical work. No single dealer in the sample accounts for more than 0.9 percent of national revenue, so no single dealer's number could move the price if it were published tomorrow.
One fact crosses the line and it is worth naming exactly. If the chief financial officer tells the analyst the quarterly revenue figure, the mosaic is over. Not because the number was more accurate, and not because it confirmed the estimate, but because that one tile is by itself material and nonpublic, and possession of it under the Indian regulation, or receipt of it as a tippee under the American one, changes the analyst's legal position entirely. Nothing about the other thirteen tiles is contaminated. The work still stands. The analyst simply may not trade on it until the company publishes, which is Worked example 1.
How do you keep the boundary visible?
Three habits keep the boundary visible in practice. Record where each tile came from and when, because a mosaic you cannot reconstruct is a mosaic you cannot defend. Notice when a source is the issuer or somebody acting for it, because that is the one relationship that can convert an immaterial conversation into a Regulation FD problem for them and a tippee problem for you. And write down the estimate before the confirming fact arrives, because the file that shows you reached 8.93 percent on 14 dealers before any call is the file that proves the conclusion was yours.