Arrow Distributing Corp. v. Richard A. Baumgartner

ALVIN B. RUBIN, Circuit Judge:

A shareholder sued under § 16(b) of the Securities Exchange Act of 1934, 1 on behalf of a corporation whose stock has been registered in accordance with the Act, 2 to recover profits realized by the corporation’s officers on the sale of corporation stock. The officers sold stock before the registration, then, after the registration and within six months of the date of sale, exercised a stock option to purchase a greater number of shares at a price lower than the amount for which they had sold their shares. The option was subject to a restriction giving the…