Brief Fact Summary. The district court found that the defendant failed to attain any revenue from the transactions in questionin a ruling on a Â§ 16(b) complaint.
Synopsis of Rule of Law. With regard to insider trading under Â§ 16(b), a beneficial owner consists of legislative insiders who have an indirect financial interest in the subject securities.
Issue. With regard to insider trading does a beneficial owner consists of legislative insiders who have an indirect financial interest in the subject securities under Â§ 16(b)?
Held. (Winter, C.J.) Yes. The SEC publicized Rule 16a-1 in accordance with its congressionally conferred power to define technical terms and issue rules suitable to execute the Exchange Act. Rule 16a-1(a)(2) defines a beneficial owner as â€œany person who, directly orÂ indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest in the equity securities.â€ Frost/FNLP had an indirect financial interest in NAVI’s IVAX stock as a result of them sharing indirectly in NAVI’s earnings via a rise in the worth of their NAVI holdings. Reversed.
No showing of actual misuse of inside information or of unlawful intent is necessary to compel disgorgement.View Full Point of Law