Is Shadow Trading Prohibited in Your Company's Insider Trading Policy?

Insider trading policies: A survey of recent filings

“Shadow trading” is the practice of an insider trading shares of another company that is “economically linked” to the insider’s company, while in possession of MNPI about the insider’s company. Companies are “economically linked” when the MNPI about the insider’s company could influence the market price of shares of the other company. This issue came to the fore in SEC v. Matthew Panuwat, when the SEC successfully prosecuted an insider trading case based on shadow trading. Companies may want to reconsider the extent to which their insider trading prohibitions apply to securities of other companies, considering the potential reputational consequences of an insider trading action. 20% of companies surveyed specifically prohibit “shadow trading” by insiders, which was an increase (by 2%) from what we saw in our 2024 survey. Note that most companies’ insider trading policies already explicitly apply to trading in the securities of the company’s customers, suppliers, and strategic partners etc., based on any information about such other companies learned through the individual’s employment. This concept is drafted more narrowly than the concept of shadow trading.

OpenAI Looks to Replace the Drudgery of Junior Bankers’ Workload

OpenAI has more than 100 ex-investment bankers helping train its artificial intelligence on how to build financial models as it looks to replace the hours of grunt work performed by junior bankers across the industry.

The group, which includes former employees of JPMorgan Chase & Co., Morgan Stanley, and Goldman Sachs Group Inc., is part of secretive project inside the startup that’s code named Mercury, according to documents seen by Bloomberg.

Participants are paid $150 per hour to write prompts and build financial models for a range of transaction types, including restructurings and initial public offerings, according to a person familiar with the effort. The company has also granted the contractors early access to the AI it’s creating that aims to replace entry-level tasks at investment banks.

Companies Prepare for California Climate Reporting, but Final Rules Are Yet to Come

Companies preparing to report their greenhouse gas emissions and climate risk in California have a matter of weeks to publish some of their inaugural reports under new rules.

But the rule making hasn’t been completed.

The California Air Resources Board, the state’s agency primarily tasked with overseeing pollution, said last week it changed its timeline to the first quarter of next year because of the amount of public comments its staff received on the requirements. The rules were originally due to be published this month.