SEC Tests Insider-Trading Theory at Trial of Ex-Biotech Executive
- Closely watched enforcement case expands trading restrictions
- Defense lawyer tells jury SEC can’t prove intent to defraud
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A lawyer for the US Securities and Exchange Commission told a jury that a former biotech executive’s $120,000 windfall on a trade in a competing company’s stock was “like betting on a game when you know who’s going to win” because he knew the pending takeover of his firm would likely boost its rival.
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.