SEC PURSUES “SHADOW TRADING” INSIDER TRADING CASE

On 25 August, Prokauer published an article on a case involving a former employee of a biopharmaceutical company and insider trading in advance of an acquisition – but with a unique twist: trading the securities of a company unrelated to the merger.  He allegedly purchased stock options for shares of a competitor not involved in the acquisition, in the belief (as alleged by the SEC) that the competitor’s stock price would also benefit from the news.  Despite the unusual nature of the case, the article proposes that the facts alleged by the SEC appear to fit within the traditional contours of the misappropriation theory and seem to suggest that the defendant had breached a duty to his own employer, and was subject to an insider-trading policy that appears to have covered the trading at issue.  An article from Akin Gump also suggests that private fund managers should track this case, as it may have broader implications, particularly for advisers that are active investors in sectors where the SEC may allege issuers are closely correlated to one another from a trading perspective.

https://www.corporatedefensedisputes.com/2021/08/mnpi-update-sec-pursues-shadow-trading-insider-trading-case/

https://www.jdsupra.com/legalnews/new-shadow-insider-trading-sec-2954539/

Any modest contributions for my time and ongoing expenses are welcomed!  I have a page where you can do so, and where one-off contributions start as low as $3, at https://www.buymeacoffee.com/KoIvM842y

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s