In this memo: “SEC Successfully Prosecutes Novel “Shadow Trading” Theory at Trial,” Gibson Dunn summarizes a recent insider trading victory by the SEC based on “shadow trading,” wherein an executive allegedly used his possession of material nonpublic information about an imminent transaction involving his own company (Medivation Inc.) to trade in the securities of an uninvolved industry peer company that he believed would benefit from the transaction. Medivation’s insider trading policy prohibited using company information for personal financial gain by trading in the company’s securities or the securities of other publicly traded companies. While the defendant is expected to appeal the verdict, the decision warrants companies’ review of the breadth and intended breadth of their insider trading policies and associated training and enforcement efforts.