But another question you might have is: Does shadow trading happen a lot? Are there a ton of corporate insiders and deal advisers who are regularly making shadow trades in order to profit from inside information? Some casual empirical data:
- Very few people get caught shadow trading; I can only really think of the one enforcement action. This could mean that it is very rare, or conversely it could mean that it happens all the time but the SEC is not in fact looking for it.
- Readers do keep suggesting it to me! I don’t know what that tells you.
Source: Shadow ETF trading – Bloomberg