Fact Pattern 27-1
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 27-1.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 27-1 
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 27-1.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 requires insiders, including directors, to disgorge any profits made from purchases and sales (or sales and purchases) of company stock within a six-month period. In this case, Sid purchased Tech stock before the release of important information (the new video game), and then sold it for a profit after the information became public. Therefore, Tech may recapture all of Sid's profits under Section 16(b).