What is SEC Rule 16b 3?
The SEC amended Rule 16b-3 to confirm that acquisitions from or dispositions to a company by its officers or directors may be exempt from Section 16(b), whether or not intended for a compensatory or other particular purpose, as long as one of the approval conditions is satisfied.
What is Section 16b?
The short-swing profit rule, also known as the Section 16b rule, is an SEC regulation that prevents insiders in a publicly traded company from reaping short-term profits.
What are Section 16 resolutions?
Section 16 Resolutions Approving the Disposition of Target Securities by Insiders in a Merger | Practical Law. These resolutions are designed to meet the approval requirements for exempting transactions from short-swing profit liability under Rule 16b-3(e) issued under the Securities Exchange Act of 1934.
What is a director by deputization?
Under the director-by-deputization theory, a stockholder may be deemed a “director” of the issuer for Section 16 purposes if the stockholder deputizes a natural person to represent its interest on the issuer’s board.
Who must file a Form 3?
director
What’s a Form 3? When a person becomes an insider (for example, when they are hired as an officer or director), they must file a Form 3 to initially disclose his or her ownership of the company’s securities.
What is a sale to issuer?
Sale of the Issuer means any transaction or event, including without limitation, any merger, consolidation, sale of assets, tender or exchange offer, reclassification, compulsory share exchange or liquidation in which all or substantially all of outstanding shares of the Issuer’s Common Stock are sold for cash.
Are short swing profits illegal?
Federal securities laws broadly prohibit fraud in the buying and selling of securities, including illegal insider trading. Except in limited circumstances, the Act prohibits “short-swing profits” (profits gained in less than six months) by corporate insiders in their own company’s stock.
What is the penalty for insider trading?
Criminal Penalties. The maximum prison sentence for an insider trading violation is now 20 years. The maximum criminal fine for individuals is now $5,000,000, and the maximum fine for non-natural persons (such as an entity whose securities are publicly traded) is now $25,000,000. Civil Sanctions.
What is a Form 4 filing with the SEC?
SEC Form 4: Statement of Changes in Beneficial Ownership is a document that must be filed with the Securities and Exchange Commission (SEC) whenever there is a material change in the holdings of company insiders. Disclosure of information required on Form 4 is mandatory and becomes public record upon filing.
What is non employee director?
A director of a Company’s Board of Directors who is not a current employee of the Company (or any parent or subsidiary company).
What triggers a Form 3 filing?
What’s a Form 3? When a person becomes an insider (for example, when they are hired as an officer or director), they must file a Form 3 to initially disclose his or her ownership of the company’s securities.
What is a Form 3 ATF?
This form is used to request approval to transfer a National Firearms Act (NFA) firearm from one qualified federal firearms licensee (FFL) to another qualified special taxpayer.
What is the legal definition of rule 16b-3?
Rule 16b-3 means Rule 16b-3 promulgated under the Exchange Act or any successor thereto. Rule 16b-3 means Rule 16b-3 under Section 16 (b) of the Exchange Act as then in effect or any successor provision. Rule 16b-3 means Rule 16b-3 promulgated under the Exchange Act.
What are the exemptions from SEC Rule 16b-7?
Rule 16b-7 exempts corporate transactions, including mergers, consolidations, reorganizations and reincorporations in a different state, from Section 16 (b) as long as specified common ownership requirements are met. The SEC views these transactions as not significantly altering the economic investment of an insider.
Is there a short-swing profit recovery rule 16b-3?
Rule 16b-3 may be relied on to exempt officer and director securities transactions from Section 16 (b) short-swing profit recovery, even if the transactions are not compensatory in nature, and
Are there any exemptions from Section 16 for acquisitions?
Sterling Holding Company, LLC, 314 F.3d 106 (3d Cir. 2002), that interpreted these exemptions narrowly, and cast doubt on the availability of Section 16 exemptions for acquisitions and dispositions by directors and officers in many merger and acquisition transactions, as well as in reclassifications.