Section 16(b): Judicial Inconsistency in Application of the Pragmatic Approach

Examines the scope and application of section 16 of the Securities Exchange Act of 1934. Initially introduced to rectify abuse by corporate insiders, section 16 has becomes the focus of controversy because of the inconsistency of application and interpretation of section 16 of the Securities Exchange Act. The author concludes that the inconsistency of recent court decisions has created confusion in the application of section 16(b) to merger situations. As a result, the author suggests courts should clarify what approach will be taken to these cases to provide the attorney with some degree of predictability. If an equitable approach cannot be found, the SEC should reconsider the exemption of these transactions.