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Abstract: 

The SEC’s victory in SEC v. Panuwat, its first-ever enforcement action for “shadow trading”—a novel theory of insider trading liability premised on an individual’s use of material non-public information about one company to trade in the stock of a separate company—highlights the reach and unpredictability of insider trading law in the United States. While ostensibly grounded in Section 10(b) of the Securities and Exchange Act of 1934, insider trading law has been established and developed by courts, leaving a body of law both very expansive and uncertain. In sharp contrast to this common-law approach to insider trading, the European Union has adopted comprehensive legislation that defines and prohibits insider trading and the disclosure of material non-public information. In this article, the authors compare insider trading regimes in the U.S. and the EU and discuss how the EU’s approach may serve as a model for federal legislation in the U.S.

Keywords: Shadow Trading; Material Non-Public Information (“MNPI”); “Misappropriation Theory” of Insider Trading; EU Market Abuse Regulation (“MAR”); United States v. Carpenter; Mr. A, Case C-302/20

Affiliations:  1: Morvillo Abramowitz Grand Iason & Anello P.C.; 2: Morvillo Abramowitz.