In the “Shadow” of Panuwat: SEC Insider Trading Unit Alumni Discuss Compliance Considerations Following Successful Shadow Trading Enforcement Action

On August 17, 2021, the SEC brought a novel insider trading enforcement action focused on so-called “shadow trading”—i.e., using confidential information about one company to trade in the securities of an “economically linked” company. Nearly three years later in the Panuwat case, a jury quickly found the defendant liable for insider trading. The SEC’s unmitigated victory in this case will likely embolden the Division of Enforcement’s pursuit of shadow trading violations. It may also motivate the Department of Justice to pursue criminal prosecutions in particularly egregious cases. In light of the heightened enforcement risk (and the overall aggressive enforcement climate), market participants should reassess and strengthen their compliance and supervisory regimes to address the risk of violations.

Please join Pillsbury partner David Oliwenstein and fellow panelists (all alumni of the SEC’s Market Abuse Unit within the Division of Enforcement) to address key questions in the wake of Panuwat, including:

• What constitutes impermissible shadow trading?
• How is the SEC (and DOJ) likely to react to the government’s big victory in the first shadow trading enforcement action?
• What policies, procedures and controls should regulated entities (e.g., broker-dealers, registered investment advisers) consider adopting to reasonably supervise and prevent shadow trading?
• What should a public company’s shadow trading compliance program look like?
• How else might the SEC look to expand its insider trading enforcement efforts?

Panelists will provide practical advice regarding how to comply with the evolving rules of the road related to shadow trading and will draw upon their knowledge to help entities refine their policies, procedures and controls to minimize enforcement risk.

For more information and to register, please visit the PLI event page.