CORPORATIONS--SECTION 16 (b) OF SECURITIES EXCHANGE ACT-SHORT SWING PROFITS-STATUTE OF LIMITATIONS

Authors

Emerson T. Chandler, University of Michigan Law SchoolFollow

Abstract

Plaintiffs brought a shareholders' class action under section 16 (b) of the Securities and Exchange Act of 1934 alleging that defendant, an officer, director, and substantial stockholder of the corporation, had realized profits from trading in the corporation's securities within a six-month period and had fraudulently concealed such profits by failing to file the statement required by section 16 (a) of the act until after suit was instituted against him over four years later by the S.E.C., thereby delaying plaintiff's discovery of the facts. Defendant moved for dismissal on the ground that suit was not brought within the two-year period as prescribed by section 16 (b), and also on the ground that plaintiffs commenced suit before the expiration of the sixty-day period after notice and demand upon the corporation as provided in section 16 (b). Held, motion denied. Fraudulent concealment by an insider of profits realized within a six-month period tolls the two-year limitation provision of the statute. Grossman v. Young, (D.C. N.Y. I 94 7) 72 F. Supp. 375.

Recommended Citation

Emerson T. Chandler, CORPORATIONS--SECTION 16 (b) OF SECURITIES EXCHANGE ACT-SHORT SWING PROFITS-STATUTE OF LIMITATIONS, 46 Mich. L. Rev. 564 (1948).
Available at: https://repository.law.umich.edu/mlr/vol46/iss4/13