Opinion ID: 545494
Heading Depth: 2
Heading Rank: 1

Heading: Policy Considerations and Legislative Purpose

Text: 10 In order to determine how broadly Sec. 16(b)'s standing requirements should be construed, we begin with a brief examination of the policy considerations and the legislative purpose that preceded the enactment of the statute. The Securities Act of 1934 in general and Sec. 16(b) in particular were passed to insure the integrity of the securities markets and to protect the investing public. See 15 U.S.C. Sec. 78p(b) (1988); Federal Securities Exchange Act of 1934, S.Rep.No. 792, 73d Cong., 2d Sess. 9 (1934) [Senate Report ]; 2 L. Loss, Securities Regulation 1037-38, 1040-41 (2d ed. 1961). 11 The Committee on Banking and Currency heard many instances where insiders either personally or through the medium of holding companies made large profits from the use of information not available to the public. Senate Report at 9. It concluded that the reporting requirements regarding changes in insider holdings and the provision making profits recoverable on sales or purchases made within six months would render difficult or impossible trading on advance information by insiders for profit. Id. The bill's provisions were for the express purpose of preventing the unfair use of inside information. Id. at 21. 12 Among the most vicious practices unearthed at the hearings before the subcommittee was the flagrant betrayal of their fiduciary duties by directors and officers of corporations who used their positions of trust and the confidential information which came to them in such positions, to aid them in their market activities. 13 Stock Exchange Practices, Report of the Committee on Banking and Currency, S.Rep.No. 1455, 73d Cong., 2d Sess. 55 (1934). Hence, Congress envisioned Sec. 16(b) as a remedial law that would deter those intrusted with the administration of corporate affairs or vested with substantial control over corporations [from using] inside information for their own advantage. Id. at 68.