Fact Pattern 21-2 (Questions 21-22 apply)
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 21-2. 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

Quizplus · Accepted Answer

Section 16(b) of the Securities Exchange Act of 1934 requires corporate insiders to disgorge any profits made from buying and selling company stock within a six-month period. In this case, Sid purchased and sold Tech stock within three weeks of learning insider information about the new video game, making him a corporate insider. Therefore, Tech may recapture all of Sid's profits under Section 16(b).

Fact Pattern 21-2 (Questions 21-22 Apply)