Stuart Waterstone Forum Index Stuart Waterstone

 
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 

Rule 16(b) example

 
Post new topic   Reply to topic    Stuart Waterstone Forum Index -> Notes
View previous topic :: View next topic  
Author Message
Waterstone
Site Admin


Joined: 31 Jan 2005
Posts: 171

PostPosted: Tue Apr 21, 2015 4:11 pm    Post subject: Rule 16(b) example Reply with quote

Rule 16(b) Strict Liability Example:

REMEMBER use of insider information is not material to recovery by the corporation.

EXAMPLE: Don Director purchases 100 shares of company stock @ $9/share on 2/1. He then sells 100 shares on 8/1 at $7/share. Then he buys 100 shares at /$l per share on 11/15. Despite the fact that stock he purchased in February was sold at a loss of $2 per share in August, and he now holds shares with a basis of $1, he will be liable for profit under section 16(b). The August sale matched with November purchase, resulting in a "profit" of $6/share, and causing him to be liable in the amount of $600,


DD: BUYS 100 SHARES $9/SHARE on 2/1

DD SELLS 100 SHARES $7/SHARE on 8/11 LOST $2/SHARE

DD BUYS 100 SHARES $l/SHARE on 11/15 HERE PROFIT OF $6 PER SHARE

DD LIABLE $600.00



TIME LINE:



2/1: BUYS 100 SHARES @ $9.00/SHARE



8/1: SELLS 100 SHARES @7.00/SHARE = LOSS $2.00/SHARE



11/15: BUYS 100 SHARES @1.00/SHARE = PROFIT $6.00/SHARE
Back to top
View user's profile Send private message
Display posts from previous:   
Post new topic   Reply to topic    Stuart Waterstone Forum Index -> Notes All times are GMT - 8 Hours
Page 1 of 1

 
Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum


Powered by phpBB © 2001, 2005 phpBB Group