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Clifford Chance

Clifford Chance


Shadow Trading: The First Test for the SEC's Novel Theory

January 27, 2022

The first test of the Securities and Exchange Commission's shadow trading theory in federal court has resulted in a win for the agency. On January 14, 2022, a federal district court denied defendant Matthew Panuwat's motion to dismiss the SEC's complaint, permitting the case to go forward on a theory of "shadow trading." Shadow trading is where corporate insiders exploit material nonpublic information about their company, to trade in the securities of an "economically-linked" company, such as a similarly situated competitor. For an in-depth discussion of the case and the shadow trading theory, see our prior client alerter.

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