Sunday, November 2, 2008
Rereading Section 16(B) of the Securities Exchange Act, by Karl S. Okamoto, Drexel University College of Law, was recently posted on SSRN. Here is the abstract:
This Article suggests a rereading of section 16(b)of the Securities Exchange Act of 1934. The rereading is based on a new statement of the provision's purpose. Although largely unquestioned, the conventional statement of purpose has led the reading of the section astray. The new statement of purpose offered here finds its theoretical and empirical foundation in modern finance economics. The new purpose also reads the statute in light of the historical context of its adoption. It reads the statute as a response to the types of market abuses which incited the public outcry for federal securities legislation in the early 1930s. Above all, a new reading of section 16(b) allows the statute to make better sense.