Amendment of Derivative Security May (or May Not) Constitute a Purchase and Sale

A judge in the SDNY has granted in part and denied in part a motion to dismiss a complaint asserting two separate 16(b) claims against a husband and wife, one based on ...

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A Costly Escape from a Reporting Error

A recent decision by the SDNY absolved a Section 16 filer of liability under Section 16(b), but it was the filer’s own oversight that led to the litigation in the ...

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Satisfaction of Condition to Exercise of Derivative Security Is Not a “Purchase”

A judge in the SDNY has issued an opinion in Chechele v. Dundon which appears to hold that an insider’s exercise of an option, subject to regulatory approval of the ...

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State Court Declines to Dismiss Complaint Alleging Legal Malpractice in Giving Section 16 (and Other) Advice

In a one-page order, a Pennsylvania trial court has declined to dismiss a complaint filed by an issuer and two of its insiders alleging that a lawyer and his firm ...

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Purchase Rescinded 604 Days Later Remains Subject to Section 16(b)

It has been decades since a rescinded transaction was the subject of Section 16(b) litigation, but last week, in Rubenstein v. Cosmos Holdings, Inc., the SDNY denied an ...

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Battle Lines Forming in Plaintiffs’ Attorneys’ Fee Fight

The dispute within the plaintiffs’ bar regarding who gets the fee when multiple attorneys submit demand letters relating to a short-swing profit that the company ...

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District Court Says “Busted Trade” Isn’t Subject to Section 16(b)

A judge in the SDNY held this week (in Connell v. Johnson) that a trade canceled before it settles is not subject to Section 16(b). The case involves a director of ...

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Investment Adviser’s Deputization of Director Does Not Make Adviser’s Clients Directors by Deputization

Last week, I wrote about the Second Circuit’s decision upholding the district court’s dismissal of the complaint filed in Rubenstein v. International Value Advisers. ...

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Second Circuit Holds that Investor’s Delegation of Investment Discretion to Investment Adviser Does Not Create a 13(d) Group

Recently, the Second Circuit affirmed the district court’s holding in Rubenstein v. International Value Advisers that an investor does not form a 13(d) group with an ...

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Gloves Off in Plaintiffs’ Attorneys’ Fee Dispute

A 16(b) plaintiff filed a complaint in the SDNY last week seeking to compel an issuer to pay her attorney’s fees for bringing a 16(b) claim to the issuer’s attention ...

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Compliance with Amended Item 405

Over the last couple of months, I’ve looked at proxy statements as they crossed my desk to determine how companies are responding to the amendments to Item 405 adopted ...

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Staff Eases Burden of Obtaining Manually Signed Reports

In case you missed it, the SEC staff issued a statement earlier this month allowing compliance personnel to file Section 16(a) reports without having a “manually ...

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Insiders Consent to Section 16(a) Sanctions

Insiders in two separate SEC enforcement actions settled by consenting to injunctions against further violations of various provisions of the federal securities laws, ...

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Court Holds that “Consultant” was a Section 16 Officer

It isn’t often that the SEC challenges a company’s determination that a particular person is not a Section 16 “officer” of the company, but it does happen ...

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SEC and EDGAR Will Be Closed on December 24

President Trump has signed an executive order closing all federal agencies on Tuesday, December 24, to give federal employees an extra day off before the Christmas Day ...

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New Exemptive Rule for Exchange-Traded Funds Doesn’t Extend to Section 16

The SEC’s new exemptive rule for exchange-traded funds exempts ETFs from many of the requirements of the Investment Company Act of 1940, but it doesn’t exempt ETF ...

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High-Frequency Traders: Beware of Section 16(b)

A decision by the SDNY earlier this week demonstrates that actual awareness of inside information is irrelevant to whether an insider’s open market transactions are ...

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Investment Fund is 10% Owner Despite Delegation of Voting and Investment Power to Affiliated Adviser

I wrote about Packer v. Raging Capital last year, when the district court denied the defendants’ motion to dismiss. The judge has now granted the plaintiff’s motion ...

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Rule 16b-3 Exempts Acquisition of Issuer Stock in Merger of Target with Issuer’s Subsidiary

A judge in the Northern District of California has dismissed a complaint filed against Elon Musk and other Tesla insiders which alleged that their acquisition of Tesla ...

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Is a Board Observer a Section 16 “Director”?

A person who has a contractual right to attend board meetings as an observer generally isn’t considered to be a director for purposes of Section 16, at least not by ...

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SEC Revises Procedure for Authenticating Form ID

The SEC has announced enhancements to the EDGAR system, one of which affects the submission of Form ID. New filers will now complete an updated online version of Form ...

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New Name, Slightly New Look, Same Quality Products!

If you subscribe to the Romeo & Dye print publications or have ever dug around a little on this website, you know that all of our Section 16 materials are published ...

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SEC Proposes to Exempt Employees’ Securities Company from Section 30(h) of 1940 Act

The SEC has proposed to exempt an investment adviser and its affiliated “employees’ securities company” from certain provisions of the Investment Company Act of ...

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Shareholder Group Finds Counsel to Pursue Tax Withholding Claims

The shareholders whose many pro se lawsuits challenging the applicability of Rule 16b-3(e) to “discretionary” tax withholding transactions ground to a halt after ...

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Staff Says Zero Cost Collar on UP-C Stock Underlying OP Units Doesn’t Violate Short Sale Rule

Yesterday Corp Fin issued an interpretive letter expressing the view that insiders of UPREITs and similar tax-structured UP-C’s who own units in the operating ...

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Agreement to Give Investment Adviser Control Over Managed Account Does Not Create a Group

I previously blogged about a SNDY judge’s dismissal of a complaint alleging that the managed accounts of an investment adviser that sought to influence control of ...

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Ninth Circuit Affirms Exemption for Conversion of Convertible Note

As noted in an earlier blog, a judge in the Northern District of California dismissed a pro se complaint filed by J.D. Jordan, one of the plaintiffs in the recent tax ...

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SEC Streamlines Item 405 Disclosure and Due Diligence Requirements

Last week, as part of its “FAST Act Modernization and Simplification of Regulation S-K” project, the SEC adopted amendments to the Section 16(a) compliance rules. ...

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Delegation of Investment Discretion to Investment Adviser Does Not Create 13(d) Group with Adviser or its Other Advisees

A judge in the SDNY has issued a potentially significant decision regarding the circumstances under which a person who delegates investment discretion to an investment ...

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Tenth Circuit Affirms Dismissal of Challenge to Tax Withholding Exemption

Last year, I noted that a district judge in Oklahoma had dismissed a Section 16(b) complaint filed against two officers of WPX Energy challenging the application of Rule ...

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Sixth Circuit Affirms Dismissal of Pro Se Complaint in Tax Withholding Case

The Sixth Circuit Court of Appeals had affirmed the district court’s dismissal of the complaint filed in Olagues v. Timken, which I discussed in an earlier blog, on ...

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Second Circuit Holds that Issuer May be Substituted as Plaintiff in Pending 16(b) Action Following Acquisition of Issuer in Cash Merger

In a 2 to 1 vote, a Second Circuit panel has reversed a SDNY decision holding that, when an issuer is acquired in a cash merger while a shareholder-initiated 16(b) ...

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Challenge to Rule 16b-3(e) Exemption Dismissed as Time-Barred

A judge in the Southern District of Florida has dismissed one of John Olagues’ complaints challenging the availability of Rule 16b-3(e) to exempt an insider’s ...

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Second Circuit Agrees that Investment Fund Ceased to be Ten Percent Owner Before Call Option Expired

I’ve blogged about Olagues v. Perceptive Advisers LLC twice before, most recently a year ago when the SDNY dismissed the complaint. As explained in my ...

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