On April 5, 2024, a jury in the Northern District of California found that Matthew Panuwat had misappropriated his employer’s confidential information and committed insider trading. The closely followed case represented the SEC’s first action under the so-called “shadow trading” theory. The SEC alleged that Panuwat possessed material nonpublic information (“MNPI”) that his employer, Medivation, would soon be acquired by Pfizer. The SEC further alleged that this information influenced his decision to purchase call options in a Medivation competitor—Incyte Corporation—because Panuwat believed the announcement of the Medivation acquisition would increase the stock prices of competitors. Despite the almost certain appeal of this decision to the Ninth Circuit, this verdict could strengthen the SEC’s resolve to bring more claims under the shadow trading theory and leaves open questions concerning whether legal and compliance officers should revise their insider trading policies and procedures to account for this development.

On March 1, 2023, the Department of Justice (“DOJ”) unsealed an indictment against the founder, CEO, and Chairman of a publicly traded health care company (the “Company”), alleging that he had illegally executed trades pursuant to Rule 10b5-1 trading plans while in possession of material nonpublic information. The Securities and Exchange Commission (“SEC”) filed a concurrent civil suit against defendant for the same activity. In each case, the government alleged that defendant improperly used his 10b5-1 plans by entering into them while in possession of material nonpublic information and triggering sales shortly thereafter, without any form of cooling-off period.

On July 21, 2022, the Securities and Exchange Commission (“SEC”) filed a complaint and the Department of Justice (“DOJ”) unsealed an indictment against Ishan Wahi, a former Coinbase employee, his brother, Nikhil Wahi, and friend, Sameer Ramani, for alleged insider trading.  SEC v. Ihan Wahi, Nikhil Wahi, and Sameer Ramani, 2:22-cv01009 (W.D. Wa. July 21, 2022); United States v. Ishan Wahi, Nikhil Wahi, and Sameer Ramani, 22-cr-392 (S.D.N.Y. 2022).  Both the complaint and indictment concern the same underlying conduct by Wahi, who allegedly provided dozens of tips to his brother and friend over several months to purchase certain digital assets tied to cryptocurrencies (the “digital assets”) shortly before they were publicly listed on Coinbase’s exchange.

On February 22, 2022, the Securities and Exchange Commission (SEC) announced that John-Michael Havrilla, a former Director of Investor Relations of PAVmed Inc. (PAVmed), a medical device company, had agreed to settle claims of insider trading.  The SEC simultaneously filed a complaint in the Southern District of New York, together with a consent agreement and proposed final judgment wherein Havrilla, without admitting or denying liability, agreed to the imposition of a permanent injunction, civil penalties of $160,230, and a five-year officer or director ban.