The SEC charged Panuwat with insider trading in Incyte securities under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, based on a misappropriation theory. Factual Considerations Although the theory of misappropriating information to use in shadow trading of other companies has not yet been tested in court, there were several noteworthy factual allegations laid out in the complaint: Takeaways We might expect the defendant to challenge the SEC's misappropriation theory on both materiality grounds and whether he breached a duty of trust and confidence. The facts alleged by the SEC, however, appear to fit within the traditional contours of the misappropriation theory and seem to suggest that the defendant had breached a duty to his own employer. As noted above, the defendant had agreed, at the outset of his employment, to keep information he learned during his employment confidential and not to use such information except for his employer's benefit.