SEC Defeats Summary Judgment Bid in ‘Shadow Insider Trading’ Case
On November 20, 2023, a federal district court denied summary judgment for the defendant in SEC v. Panuwat, a litigated enforcement action brought by the Securities and Exchange Commission (SEC) relating to so-called “shadow trading.” Shadow trading involves an investor possessing material non-public information (MNPI) about “Company A” but trading in the securities of “Company […]
Peter Altman, Katherine Goldstein and Douglas Rappaport are Partners at Akin Gump Strauss Hauer & Feld LLP. This post is based on a memorandum by Mr. Altman, Ms. Goldstein, Mr. Rappaport, Michael Asaro, Parvin Daphne Moyne, and Brian Daly. Related research from the Program on Corporate Governance includes Insider Trading via the Corporation (discussed on the Forum here) by Jesse M. Fried.
On November 20, 2023, a federal district court denied summary judgment for the defendant in SEC v. Panuwat, a litigated enforcement action brought by the Securities and Exchange Commission (SEC) relating to so-called “shadow trading.” Shadow trading involves an investor possessing material non-public information (MNPI) about “Company A” but trading in the securities of “Company B,” another company with which Company A shares some form of close connection in the market. In this case, defendant Matthew Panuwat, in the course of his employment at a company called Medivation, allegedly learned that his company would be acquired, and seven minutes later began buying out-of-the-money, short-term call options in another company, Incyte. The SEC has alleged that Incyte was a closely comparable company to Medivation.
