Short-swing profits:
A) refer to any profits made by insiders who buy and sell company stock within a three-month time period.
B) rule of Section 16 depends on any misuse of information.
C) by insiders, regardless of the insiders' states of mind, are absolutely prohibited.
D) requires proof of intent to deceive under Section 10(b).
E) liability is created by the Securities Act of 1933.

Question

Quizplus · Accepted Answer

Because the SEC cannot determine for certain when nonpublic information is improperly used, Section 16 creates a presumption that any profit made within a six-month time period is illegal. These profits are referred to as short-swing profits. Unlike the required proof of intent to deceive under Section 10(b), the short-swing profits rule of Section 16 does not depend on any misuse of information. In other words, short-swing profits by insiders, regardless of the insiders' states of mind, are absolutely prohibited.

Short-Swing Profits