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U.S. SEC Wins 'Shadow Insider Trading' Trial

On Friday, April 5, 2024, a San Francisco jury found the defendant liable in SEC v. Panuwat, the closely watched litigated enforcement action brought by the U.S. Securities and Exchange Commission (SEC) relating to so-called “shadow trading.” The jury reached its verdict following an eight-day trial and with less than three hours of deliberation.

Prior to the beginning of trial, Panuwat raised several objections to the court’s proposed jury instructions, going so far as to seek leave to file an interlocutory appeal. On direct examination, Panuwat testified that his purchase was unrelated to the news he received about the impending acquisition of Medivation, and was instead based on an analyst report he had read the month prior. It could also signal that the jury was not persuaded by the purported differences between Medivation and Incyte, and viewed it as apparent that information material to one firm could be expected to move the other’s stock price.

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