The Securities and Exchange Commission has amended its rules on short-swing dealings by officers and directors to make clear that profits made from certain merger and acquisition transactions are exempt from restrictions on insider profit-making.
The SEC’s actions come in the wake of a court decision by the Philadelphia-based 3rd Circuit two years ago limiting the exemptions in rules promulgated under Section 16(b) of the Securities Exchange Act to compensation-related transactions, and stating that exemptions aren’t always available in the context of stock reclassification. The Commission itself had, to no avail, told the court that the rules were not meant to be interpreted so narrowly.
