Define: Short-Swing Profits

Short-swing profits refer to gains made by corporate insiders, such as officers, directors, or beneficial owners, from buying and selling company securities within a six-month period.

Short-swing profits are legal, but they are subject to specific regulations and restrictions under the Securities Exchange Act of 1934 to prevent insider trading and unfair advantage.

Regulating short-swing profits aims to prevent corporate insiders from taking advantage of non-public information and profiting at the expense of other shareholders.

The holding period for short-swing profits is six months, meaning insiders must hold the securities for at least six months before selling them to avoid triggering the regulations.

If an insider sells securities within the six-month holding period, they may be required to disgorge any profits made from those transactions to the company.

Yes, there are certain exceptions to the short-swing profit regulations, such as transactions made through employee benefit plans or in cases of involuntary sales, mergers, or acquisitions.

Short-swing profits are calculated by comparing the purchase and sale prices of the securities within the six-month period to determine any gains made by the insider.

No, short-swing profit regulations apply to any securities of the company, including common stock, preferred stock, options, or other derivative securities.

Violating short-swing profit regulations can result in legal consequences, including disgorgement of profits, fines, and potential civil lawsuits by shareholders seeking recovery.

Companies can implement internal controls, educate insiders about the regulations, and monitor trading activities to prevent inadvertent or intentional violations of short-swing profit rules.