Good morning. Biotech executive Matthew Panuwat bought options on another drug company’s stock—and earned a windfall of $120,000.

The Securities and Exchange Commission now says he committed insider trading, even though he didn’t buy his employer’s stock and didn’t have inside information about the company he bet on.

• Testing opaque regulation: The case, which goes to trial next month, has become the latest test of insider-trading law. Congress has never defined what it means, leaving regulators and courts across the country to decide what qualifies, a volatile process that sometimes leads appellate courts to rein in what they see as excesses.
   
• First case of its kind: Defense lawyers have dubbed Panuwat’s case the first involving “shadow insider trading,” a label that describes executives making well-timed bets in the shares of other companies. The SEC alleges Panuwat purchased options tied to the shares of Incyte, a rival drugmaker, because he knew they would pay off when the market heard Pfizer was buying his company, Medivation, in 2016.
   
• A bit of a stretch? No court has ever tackled the idea that executives can go too far when they deploy their specialized knowledge or expertise to trade in the shares of rivals, said Karen Woody, a professor at the Washington and Lee University School of Law. “I do think this is a push of the law and they are seeing if they can get a court to bless what is a bit of a stretch of the existing parameters,” Woody said of the SEC’s case.

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Court tosses $1 billion verdict against Cox Communications for music piracy.

A federal appeals court on Tuesday tossed a $1 billion verdict won by music publishers against Cox Communications, ordering a new trial on how much the internet provider should owe in damages for illegal downloads by its customers.

What was the case? It stems from a 2018 copyright-infringement lawsuit filed by leading record companies and music publishers, including Sony, Universal Music and Warner Music. Instead of suing individuals for stealing copyrighted work, the labels targeted Cox for allegedly failing to prevent its customers from downloading and distributing songs without permission.

New rules will force buyout firms to flag suspicious investments.

After more than 20 years of debate, private-equity firms are about to be drafted into the fight against dirty money, reports WSJ Pro Private Equity (subscription required).

The context for private equity: The Treasury Department proposal is the fruit of more than two decades of pressure by anticorruption groups and lawmakers, who have had to overcome the resistance of Wall Street lobbyists as well as fellow legislators, some of whom remain unconvinced that the change is necessary or will help fight financial crimes.

• The Chinese securities regulator’s newly appointed head has assured market participants that the regulator will respond to market concerns in a timely manner to strengthen the country’s capital markets that have been battered by weak investor confidence.
   
• A cybersecurity regulation from the United Nations that takes broad effect this year is forcing car companies in Europe to discontinue older car models.
   
• The U.S. Supreme Court declined to hear a case brought by South Carolina’s ports authority, letting stand a lower-court ruling that effectively requires the Port of Charleston to use an all-union labor force at a new container terminal.
   
• Sports-centric streaming service FuboTV sued the media companies behind a new sports-streaming platform scheduled to launch this fall, alleging they wouldn’t let Fubo carry a small bundle of sports-focused channels that they are now looking to include in the new service.

Data show the economy is booming. Wall Street thinks otherwise.

Data suggesting the U.S. economy is too hot for comfort are getting a cool reception in some corners of Wall Street.

What’s the debate? A handful of high-profile economic reports have leaned decidedly on the too-warm side. But many economists have minimized these surprises, pointing to other data that are less alarming and measurement challenges that are unique to the start of the year.

Investors walking the line: Such arguments have been eagerly accepted by investors who have been rooting for growth strong enough to avoid a recession but mild enough to allow the Federal Reserve to cut interest rates—a seemingly narrow path, with inflation running above the Fed’s 2% target.

Bold Houthi attacks give Biden stark choices.

A cargo ship is at risk of sinking in the Gulf of Aden after being hit by Yemen-based Houthis in the most significant strike since the Iran-backed group started launching attacks last fall in a crucial shipping lane to disrupt global commerce.

At stake: Persistent Houthi strikes are raising new questions for the Biden administration about how to bring the attacks to a halt and prevent the continuing war in the Gaza Strip from fueling a more destabilizing regional conflict.

• China’s economic malaise has pushed policymakers and state-owned banks to attempt an escalating series of remedies. Their latest attempt: A surprisingly aggressive cut to a key lending rate.
   
• Walmart’s sales surged across its stores and online operations through the holiday season, but the retailer is girding its business as inflation moderates and consumers remain selective about their spending.

• The Supreme Court on Tuesday turned down a case seeking to block selective public schools from using race-neutral admissions policies that conservative activists argue are illegally designed to increase Black and Hispanic enrollment.
   
• SpaceX is deepening its ties with U.S. intelligence and military agencies, winning at least one major classified contract and expanding a secretive company satellite program called Starshield for national-security customers.
   
• Russia detained a woman with dual U.S. and Russian citizenship over suspected treason, alleging that she raised money for the Ukrainian war effort.
   
• Marijuana contaminated with arsenic, lead or mold is causing serious, even life-threatening illnesses around the country as use of cannabis products explodes.
   
• For a few days, it seemed that Ecuador would stand up to a much bigger country, Russia, in helping the West fight Moscow’s invasion of Ukraine. Then Russia stopped buying some of Ecuador’s bananas.

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