Section 16(b)
Section 16(b) is a provision of the Securities Exchange Act of 1934 (the Exchange Act) that requires certain company insiders to disgorge profits from short-term trades of the issuer’s equity securities, typically within a six-month window.
Example: An executive purchases shares on January 1 and disposes of them on June 1 of the same year, realizing a profit; under Section 16(b) this profit could be disgorged to the issuer if both trades fall within six months.
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