Section 16(b)

In order to prevent insiders from gaining profit in their own interest, Section 16(b) requires insiders (directors, shareholders who own more than 10% of shares as well as third parties who sold or purchased on their behalf) to return their profits if:

a. the transaction involving the fraudulent conduct occurred within a period of sixth months

b. the transaction must have involved any security besides debt securities.

c. there must have been a profit realized. a profit can be a gain or an avoided loss.