Corporate executive prevails before Sixth Circuit in short-swing trading case

Client(s) Corporate executive

Jones Day represented the CEO of a publicly-traded steel company in a case under Section 16(b) of the Securities Exchange Act that sought disgorgement of alleged profits from short-swing trading. The plaintiff asserted a novel theory that the executive's surrender of stock as payment for the exercise of incentive stock options was a "sale" transaction for purposes of the short-swing trading rules, and could be "matched" with a later open-market purchase of stock. The district court dismissed the complaint, and in a case of first impression at the circuit-court level, the Sixth Circuit held that a shareholder may not litigate a Section 16(b) case pro se.