Short swing
Template:Refimprove A short swing rule restricts officers and insiders of a company from making short-term profits at the expense of the firm. It is part of United States federal securities law, and is a prophylactic measure intended to guard against so-called insider trading.[1] The rule mandates that if an officer, director, or any shareholder holding more than 10% of outstanding shares of a publicly traded company makes a profit on a transaction with respect to the company's stock during a given six-month period, that officer, director, or shareholder must pay the difference back to the company.[2] Note that the profit calculated is the maximum considering each pair of sales and purchases, a larger trade could be paired with trades up to six month prior as well as up to six months later and the correct calculation is a linear programming problem[3]
As stated by a federal circuit court of appeals: Template:Quote
See also
References
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- ^ See William A. Klein et al., Business Associations, 511 (6th ed. Foundation Press)(2006).
- ^ The statutory text of the rule can be found at section 16(b) of the Securities Exchange Act of 1934, codified at 15 U.S.C. section 78p(b).
- ^ Page Module:Citation/CS1/styles.css has no content."Short-Swing Profit Liability Calculator for Insider Trading Under Section 16(b) of the Securities Exchange Act of 1934". 16b.law.unc.edu. Retrieved 2017-09-20.
