SEC’s ‘Shadow Trading’ Case May Hinge on Company Policy Language

Judges appeared divided at appellate argument Thursday over whether a biotechnology company executive’s trades in another drug developer’s securities were lawful, with a corporate insider trading policy potentially holding the key in a case involving a novel SEC liability theory.

Attorneys for the Securities and Exchange Commission and Matthew Panuwat both focused on what Medivation Inc.'s policy language meant, whether it was unambiguous, and whether it trumped other obligations not to trade stock. The answers to those questions at the US Court of Appeals for the Ninth Circuit may determine whether the former executive frees himself from liability, gets another ...