Stella v. Graham-Paige Motors Corp.

MOORE, Circuit Judge.

The plaintiff (appellant) brought this derivative action as a stockholder of Kaiser-Frazer Corporation (referred to as “KF”) to reclaim for KF from the defendant Graham-Paige Motors Corporation (referred to as “GP”) profits allegedly received by GP on the sale of 155,000 shares of KF stock within six months after their purchase by GP. The action is based upon the theory that under section 16(b) of the Securities Exchange Act of 1934 (48 Stat. 896, 15 U.S.C.A. section 78p(b)), the seller (KF) may recover any profit made by the purchaser (GP), a so-called “insider,” in the…