Brooklyn Journal of Corporate, Financial & Commercial Law


Kayla Kershen

First Page



In 2021, the SEC filed a complaint against a biopharmaceutical executive, Matthew Panuwat, for trading on material non-public information in violation of both the federal securities laws and his employer’s company policies. However, because the subject of the confidential information was not his employer, but a similarly situated peer company, Panuwat’s conduct constitutes “shadow trading.” The SEC’s enforcement, and the Northern District of California’s subsequent approval, indicate that company insiders may face liability for shadow trading. However, as written, the SEC arguably bases its attachment of federal liability on the company policies that Panuwat was bound by and violated. This Note argues that such enforcement of company policies should be avoided by drawing parallels to Van Buren v. United States. Instead, shadow trading should be pursued via misappropriation theory, breaches of company policies should be treated as breaches of contract, and companies should enact effective compliance programs.