Blau v. Lehman

Against the background of “a widely condemned evil,” § 16(b) of the Securities Exchange Act of 1934 put teeth into the concept of a corporate director’s fiduciary obligation by the simple but arbitrary course of requiring him to disgorge to his corporation “insider” profits from stock speculation obtained under stated circumstances and without regard to his own good faith or innocence. This device has worked successfully where more refined methods might have failed; and although the provision “is probably the most cordially disliked provision in all these statutes from the point of view of…