IN THIS ISSUE

Northern District of California Validates SEC’s “Shadow Trading” Theory of Insider Trading Liability; Seventh Circuit Reverses Dismissal of Stockholder Derivative Suit Against Boeing Based on Forum-Selection Bylaw; Delaware Court of Chancery Denies Expedited Proceedings in Breach of Fiduciary Duty Suit Against Arena Pharmaceuticals Directors.

On January 14, 2022, the U.S. District Court for the Northern District of California denied defendant Matthew Panuwat’s motion to dismiss the SEC’s first major insider trading enforcement action involving allegations of “shadow trading.” The SEC’s complaint alleges that Panuwat used confidential information he learned about Pfizer, Inc.’s acquisition of Medivation, Inc., a mid-sized oncology-focused biopharmaceutical company for which he was a business development executive, to buy stock options in Incyte Corp., another mid-cap oncology-focused biopharmaceutical company whose value Panuwat anticipated would materially increase when Pfizer’s targeted acquisition became public.

Relying on the misappropriation theory of insider trading, the SEC asserted claims against Panuwat under Section 10(b) of the Securities Exchange Act of 1934, and Rule 10-b5 promulgated thereunder. Panuwat moved to dismiss the claims against him. In addition to arguing that the SEC failed to adequately plead any claim under Section 10(b) because, among other things, the information he allegedly learned was about Medivation and not Incyte, Panuwat...

Read Full Story: https://www.jdsupra.com/legalnews/northern-district-of-california-8653591/