Asked by Mollie Weber on Jul 19, 2024
Verified
Section 16(b) of the 1934 Act differs from Rule 10b-5 in that the latter:
A) applies to transfers within 6 months of each other.
B) only applies to officers, and directors.
C) requires material inside information.
D) only applies to 10% shareholders.
Section 16(b)
A provision of the Securities Exchange Act that aims to prevent unfair use of nonpublic information by requiring insiders to return any profits made from buying and selling their company's stock within a short time frame.
1934 Act
A federal statute that provides for the regulation of the securities industry, including the creation of the Securities and Exchange Commission.
Rule 10b-5
Rule 10b-5, under the United States Securities Exchange Act of 1934, is a regulation prohibiting fraudulent practices in securities trading, including misrepresentation and insider trading.
- Acquire knowledge on the guidelines provided by the SEC on insider trading and the mandatory disclosure of executive pay.
Verified Answer
DC
Destiny CavinsJul 23, 2024
Final Answer :
C
Explanation :
Section 16(b) of the 1934 Act is designed to prevent short-swing profits by insiders, without requiring proof of insider trading, whereas Rule 10b-5 requires the use of material non-public information in connection with the purchase or sale of securities.
Learning Objectives
- Acquire knowledge on the guidelines provided by the SEC on insider trading and the mandatory disclosure of executive pay.