The profits realized for violation of Rule 16(b)are given directly to the shareholders as a penalty to the corporation.

Question

Quizplus · Accepted Answer

The profits realized from a violation of Rule 16(b) are disgorged and must be paid to the corporation itself, not directly to the shareholders. Rule 16(b) under the Securities Exchange Act of 1934 is designed to prevent insiders from profiting from short-swing transactions based on access to non-public information.

The Profits Realized for Violation of Rule 16(b)are Given Directly