Medtox Scientific, Inc., Formerly Known as Editek, Inc. v. Morgan Capital, L.L.C., Alex Bistricer, David Bistricer

WOLLMAN, Chief Judge.

Morgan Capital, L.L.C. appeals from a district court 2 order requiring it to disgorge the profits of short-swing stock sales. We affirm.

I

The facts of this case are undisputed. On February 1, 1996, Medtox Scientific, Inc. 3 issued shares of preferred stock. The preferred stock was convertible to Medtox’s common stock, at the option of the holder, at a price equal to the average closing price of the common stock for the five trading days preceding the notice of conversion. The conversion right became exercisable on March 30, 1996. Morgan Capital purchased preferred stock in…