Short swing
Encyclopedia
A short swing rule restricts officers
and insiders of a company from making short-term profits at the expense of the firm. It part of United States federal securities law, and is a prophylactic measure intended to guard against so-called insider trading
. The rule mandates that if an officer, director, or any shareholder holding more than 10% of outstanding shares of a publicly traded company makes a profit on a transaction with respect to the company's stock during a given six month period, that officer, director, or shareholder must pay the difference back to the company.
As stated by a federal circuit court of appeals:
Corporate title
Publicly and privately held for-profit corporations confer corporate titles or business titles on company officials as a means of identifying their function in the organization...
and insiders of a company from making short-term profits at the expense of the firm. It part of United States federal securities law, and is a prophylactic measure intended to guard against so-called insider trading
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
. The rule mandates that if an officer, director, or any shareholder holding more than 10% of outstanding shares of a publicly traded company makes a profit on a transaction with respect to the company's stock during a given six month period, that officer, director, or shareholder must pay the difference back to the company.
As stated by a federal circuit court of appeals: