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The Solution To Shadow Trading Is Not Found In Current Insider Trading Law: A Proposed Amendment To Rule 10b5-2, Jamel Gross-Cassel
The Solution To Shadow Trading Is Not Found In Current Insider Trading Law: A Proposed Amendment To Rule 10b5-2, Jamel Gross-Cassel
Fordham Journal of Corporate & Financial Law
Shadow trading is a lucrative way to exploit a loophole in insider trading law. Insiders abuse this loophole to make six-figure profits and escape liability when done at the right companies. Those who shadow trade use material, nonpublic information to trade not in the securities of their own company, which would be illegal, but in the securities of a closely related company where the information is just as impactful. Efforts to close this loophole rely on the individual insider trading policies of the involved companies. These policies vary in language, making liability for shadow trading dependent on specific language or …