Fact Pattern 20-2
Sid,a director of Tech Software Company,learns that a Tech engineer has developed a new,exciting video game.Sid buys Tech stock and tells his friend Uri,who also buys Tech stock.When the new game is released three weeks later,Sid and Uri sell their stock for a big profit.
-Refer to Fact Pattern 20-2.Regarding Sid's profits on the purchase and sale of Tech stock,under Section 16(b)of the Securities Exchange Act of 1934 Tech may recapture

Question

​Fact Pattern 20-2 
Sid,a director of Tech Software Company,learns that a Tech engineer has developed a new,exciting video game.Sid buys Tech stock and tells his friend Uri,who also buys Tech stock.When the new game is released three weeks later,Sid and Uri sell their stock for a big profit.
-Refer to Fact Pattern 20-2.Regarding Sid's profits on the purchase and sale of Tech stock,under Section 16(b)of the Securities Exchange Act of 1934 Tech may recapture

Quizplus · Accepted Answer

Section 16(b) of the Securities Exchange Act of 1934 prohibits insiders, such as directors, from profiting from short-swing transactions (purchases and sales of stock within a six-month period). If an insider makes a profit from such a transaction, the company can recover the profits within two years. In this case, Sid purchased Tech stock and sold it for a profit three weeks later after learning of the exciting video game. Therefore, Tech can recapture all of Sid's profits under Section 16(b).

​Fact Pattern 20-2

Fact Pattern 20-2