“Shadow Trading” Case: Why Companies Should Revisit Insider Trading Policies

1 minute read | April.09.2024

The verdict arrived this week in a groundbreaking insider trading enforcement action by the Securities and Exchange Commission. 

The case highlights the potential for expanded risks of stock trading for officers and directors of publicly traded companies – and may expand concerns about insider trading to directors and officers of private companies as well. 

What the SEC calls “shadow trading” occurs when a corporate insider uses material, nonpublic information about their company to trade in securities of another, comparable publicly traded company. 

In a new article for Bloomberg Law, Orrick’s Stephen Thau, Paul Rugani and Nina Ganti delve into the “shadow case” and its implications and encourage companies to consider revising insider-trading policies.