Securities Regulation - Section 16(b) - Benefits Test Used to Determine Whether Corporate Insider Beneficially Owned His Spouse's Shares

Abstract

INTRODUCTION|The United States Court of Appeals for the Second Circuit recently resolved a question of first impression in the circuit courts concerning the interpretation of section 16(b) of the Securities Exchange Act of 1934. Section 16(b), designed to discourage short-term speculation in listed equity securities by persons presumed to have access to inside information because of their relationship to the issuer, permits the issuer to recover any short-swing profits realized by such statutory insiders. Thus, any officer, director or beneficial owner of more than ten per cent of the outstanding securities of the corporation in whose shares he trades is subject to liability for the successive purchase and sale or sale and repurchase of his corporation's securities within a six-month period...