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Securities

Mar. 26, 2024

SEC's 'shadow trading' theory goes to trial in San Francisco

The theory involves an investor using confidential information about one company to trade in the securities of another company closely related to the first company. If the jury sides with the SEC, the scope of insider trading regulations may significantly expand.

The U.S. Securities and Exchange Commission’s novel “shadow trading” theory went to trial for the first time on Monday in San Francisco as the government agency looks to test the limits of insider trading regulations against a former biopharmaceutical executive.

Shadow trading involves an investor possessing confidential information about one company and trading in the securities of another company that is closely related to the first comp...

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