Article
Reliance Electric, Occidental Petroleum, and Section 16(b) Interpretive Quandary over Mergers
Texas Law Review
(1972)
Abstract
Section 16(b) of the Securities Exchange Act of 19341 was enacted
to discourage corporate insiders from engaging in short-swing speculative
trading in the equity securities of large publicly held corporations.
The aim of the section was to bar the insiders from profiting by their
access to information not available to the investing public.' From the
first, the statute has been strictly enforced. A finding of liability under
16(b) has not required a showing of actual use of inside information:
insider status itself has served as the basis for the statutory presumption
that the short-swing trader has utilized some information not generally
available to investors. Neither clear proof of the absence of any inside
information nor proof of legitimate reasons for entering the transaction
have been recognized as a defense to liability under the statute.3 Even
within this rigid enforcement scheme, however, the courts have read the
statute in markedly different manners, particularly as transactions to
which 16(b) has been applied have become increasingly complex
Keywords
- Section 16(b) Securities Exchange Act of 1934,
- insider trading
Disciplines
Publication Date
1972
Citation Information
Raymond J Batla. "Reliance Electric, Occidental Petroleum, and Section 16(b) Interpretive Quandary over Mergers" Texas Law Review Vol. 51 (1972) p. 89 - 118 Available at: http://works.bepress.com/raymond-batla/35/