Smolowe v. Delendo Corp.
United States Court of Appeals for the Second Circuit
136 F.2d 231 (1943)
Delendo (defendant) directors, officers, and major shareholders Seskis and Kaplan bought and sold thousands of shares between December 1939 and May 1940 while the company was negotiating a sale of its assets that was delayed by tax issues; after the sale closed and Delendo dissolved, shareholders Smolowe and Levy (plaintiffs) sued under SEA Section 16(b), and the district court calculated and awarded Delendo the highest possible profits from matching the defendants' purchases and sales within the six-month window.
Whether, under Securities Exchange Act Section 16(b), a corporation may recover profits made by corporate insiders from short-swing trading even absent proof they misused inside information.