X

Legal Memorandum: Actions for Violation of § 16(a) of SEC

Issue: Under federal law, is there a private cause of action for a violation of Section 16(a) of the Securities Exchange Act of 1934?

Area of Law: Corporate & Securities
Keywords: Private cause of action; Violation of Section 16(a); Securities Exchange Act of 1934
Jurisdiction: Federal
Cited Cases: 61 F.3d 8; 903 F. Supp. 452
Cited Statutes: Section 16(a) of the Securities Exchange Act of 1934
Date: 02/01/2010

Section 16(a) of the Securities Exchange Act of 1934 (“Exchange Act”) any director or  officer of the issuer, or any beneficial owner of more than 10% of any class of outstanding shares (“statutory insiders”) must disclose any change in ownership “before the end of the second business day following the day on which the subject transaction has been executed.”  15 U.S.C. § 78p(a). 

No cases appear to recognize a private cause of action for violation of the filing requirements of section 16.  See Gem Global Yield Fund Ltd. v. Surgilight, Inc., No. 04-CV-4451 (KMK), 2006 U.S. Dist. LEXIS 58222 n.4 (S.D.N.Y. Aug. 17, 2006) (noting that defendants’ counterclaim stating a cause of action for alleged violation of section 16(a) was withdrawn upon defendants’ “recognition that there is no private right of action under section 16(a)”); Levner v. Al Saud, 903 F. Supp. 452 (S.D.N.Y. 1994) (amended complaint deleted original claim seeking damages from defendant’s failure to comply with filing requirements of Section 16(a)), aff’d, 61 F.3d 8 (2d Cir. 1995).

[…]

Subscribe to Litigation Pathfinder

To get the full-text of this Legal Memorandum ... and more!

(Month-to-month and annual subscriptions available)