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by Mike Caswell

Ryan Shapiro, one of two Florida men charged for an insider trading scheme that included Ontario's Aphria Inc., has asked the judge to throw out the charges against him. Prosecutors claim that Mr. Shapiro and a co-accused generated at least $4-million in illegal profits using non-public information. (All figures are in U.S. dollars.) Most of the gains came from trades that the men executed after learning about a takeover bid for Aphria, the government claims.

Mr. Shapiro's request is contained in a motion that he filed in federal court in Boston on Oct. 7, 2022. He is asking that the judge dismiss the charges on the basis that he did not trade using non-public information. Somewhat confusingly, he does not explicitly deny possessing inside information, nor does he deny making the trades at issue. His argument is that there is no allegation he used the inside information to enter his trades.

It is not clear from Mr. Shapiro's motion how one can possess inside information without it factoring into a trading decision. His argument appears to be premised more on a parsing of the relevant securities law and the wording of his indictment than anything else. As Mr. Shapiro sees things, the rules are only violated when one trades "on the basis of" material, non-public information. He says that prosecutors have not shown that he used such information while trading. The indictment is based on the allegation that he traded "while in possession of" non-public information. Prosecutors did not accuse him of using that information, he says.

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