A San Francisco Court held that an executive may be held liable for “shadow trading” namely trading in securities of a similarly situated competitor’s shares while in possession of insider information about his own company. The defendant was a senior director of business development at a pharmaceutical company bound by the company’s insider trading policy. When the company began exploring a strategic merger, the executive purchased call options in a competitor’s stock. When the merger was announced the stock price of the competitor rose significantly and the executive realised over $100 000 profit from his call options. The rules prohibited trading of “any security” using “any manipulative orders or deceptive device” and sufficient to cover the situation. The court also found that the executive had breached a fiduciary duty to his employer whose rules prohibited trading “in securities of another publicly traded” entity based on confidential company information. The executive’s intention to profit from the trades was presumed from the fact that he purchased the call options minutes after learning of the pending merger.