An insider is liable for so-called short-swing profits only if she has used inside information.

Question

Quizplus · Accepted Answer

An insider is liable for short-swing profits under Section 16(b) of the Securities Exchange Act of 1934 regardless of whether or not inside information was used. Section 16(b) requires insiders to disgorge any profits made on the purchase and sale of company securities within a six-month period. This is to prevent insiders from using their position to make quick profits by buying and selling shares based on information that is not available to the public.

An Insider Is Liable for So-Called Short-Swing Profits Only If