Section 16 B Exchange Act

With respect to transactions by persons subject to section 16 of the act.

Section 16 b exchange act. The act was passed in large part as a response to the stock market crash of 1929 to provide more transparency in the secondary securities market. The rules under section 16 of the act also apply to non equity securities as provided by the investment company act of 1940. Section 16 is a rule within the securities exchange act of 1934 sea that articulates the regulatory filing responsibilities that directors officers and principal stockholders are legally.

Section 16 b of the securities exchange act of 1934 definition provides that officers directors and shareholders holding shares worth 10 percent or more of a corporation s stock must pay to the corporation any profits they make from buying and selling the corporation s stock within a six month period. Necessity for regulation as provided in this title. Section 16 a provision of the securities exchange act of 1934 that requires company insiders to file periodic reports disclosing their holdings and changes in beneficial ownership of the company s equity securities.

The securities and exchange act of 1934 created the sec and section 10b of the act gave the sec the power to enact rules against manipulative and deceptive practices in securities trading. Section 16 a 3 b of the exchange act as amended by the sarbanes oxley act of 2002 states in part that forms 4 and 5 shall indicate ownership by the filing person at the date of filing does this mean that an insider must report ownership of all classes of equity securities of the issuer each time the insider files a form 4 or 5. 1 securities exchange act of 1934 as amended throughp l.

112 158 approvedaugust10 2012 table of contents titlei regulation ofsecuritiesexchanges. Section 17 records and reports. Section 17a national system for clearance and settlement of securities transactions.

If an officer a director or a large 10 or more shareholder of a public corporation realizes a profit from buying and selling stock within a six month period section 16 b of the securities exchange act of 1934 the act authorizes the corporation to recover from such statutory insider any so called short swing profits. Section 16 directors officers and principal stockholders. Section 18 liability for misleading statements.

Section 17b automated quotation systems for penny stocks.