An insider must use inside information in connection with the purchase and sale of securities to violate Section 16(b)of the Securities Exchange Act of 1934.

Question

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Section 16(b) of the Securities Exchange Act of 1934 targets the prevention of unfair use of information by insiders but does not require the actual use of inside information in connection with the purchase or sale of securities. It focuses on short-swing profits made by corporate insiders within a six-month period, regardless of whether inside information was used.

An Insider Must Use Inside Information in Connection with the Purchase