The civil trial that began Monday in San Francisco will answer the novel question of whether buying or selling another company’s stock based on specialized industry knowledge constitutes insider trading.
… Securities traders and lawyers are closely watching the San Francisco case of Matthew Panuwat, the SEC’s first attempt to pursue so-called shadow trading. It also underscores how Congress has never explicitly defined insider trading, leaving courts to decide when the SEC oversteps its authority.
… Seven minutes after receiving an August 2016 email from Medivation’s CEO that said Pfizer Inc. was interested in acquiring it, Panuwat invested more than $117,000, or almost half of his annual salary, on call options in rival Incyte Corp., according to the agency.
Pfizer announced the $14 billion Medivation deal days later. By taking one mid-cap biopharma company off the market, the deal made Incyte a more valuable acquisition target, the SEC alleged in its suit against Panuwat.
“The efficient-market hypothesis may be the foremost piece of B.S. ever promulgated in any area of human knowledge!”
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