SEC’s Novel ‘Shadow Trading’ Case Lacked Key Piece, Exec Says

The SEC’s first enforcement action targeting an employee’s use of nonpublic information to trade in a competitor’s stock never should have gone to a jury, a former biotechnology executive told the Ninth Circuit.

Medivation Inc.'s insider trading policy permitted the transactions at the center of the civil trial, “meaning there was no duty not to trade,” Matthew Panuwat said May 16 in his opening appellate brief. Without a duty, there was no breach of duty, no deception, and no “deceptive device” needed to establish the type of securities fraud violation the Securities and Exchange Commission alleged, Panuwat argued.

The US ...