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Insider Traders May Be Subject to Shareholder Actions to Recover Short-Term Profits
During times of increased market volatility, opportunities for short-term profit-taking become more prevalent. However, corporate insiders who trade in their company’s stock in such an environment may be subject to shareholder actions aimed at recovering any short-term profits they earn.
Section 16(b) of the Securities Exchange Act of 1934 requires corporate insiders to disgorge any profits earned from buying and selling their company’s stock within a six-month period. These gains, referred to as “short-swing profits,” must be returned to the company, regardless of the insider’s intent. In essence, Section 16(b) imposes strict liability — no proof of insider trading or wrongful intent is necessary for recovery.
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Summary Judgment Denied Defendant in Declaratory Action by Producer of To Kill a Mockingbird Broadway Play Seeking Amateur Theatrical Rights
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Disconnect Between In-House and Outside Counsel
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