40-265. Profits from sale or purchase of equity securities to inure to benefit of company, when; actions for recovery; exemption.
40-265
40-265. Profits from sale or purchase of equity securities to inure tobenefit of company, when; actions for recovery; exemption.For the purpose of preventing the unfair use of information which mayhave been obtained by such beneficial owner, director or officer by reasonof his relationship to such company, any profit realized by him from anypurchase and sale, or any sale and purchase, of any equity security of suchcompany within any period of less than six (6) months, unless such securitywas acquired in good faith in connection with a debt previously contracted,shall inure to and be recoverable by the company, irrespective of anyintention on the part of such beneficial owner, director or officer inentering into such transaction of holding the security purchased or of notrepurchasing the security sold for a period exceeding six (6) months. Suitto recover such profit may be instituted at law or in equity in any courtof competent jurisdiction by the company, or by the owner of any securityof the company in the name and in behalf of the company if the companyshall fail or refuse to bring such suit within sixty (60) days afterrequest or shall fail diligently to prosecute the same thereafter; but nosuch suit shall be brought more than two (2) years after the date suchprofit was realized. This section shall not be construed to cover anytransaction where such beneficial owner was not such both at the time ofthe purchase and sale, or the sale and purchase, of the security involved,or any transaction or transactions which the commissioner by rules andregulations may exempt as not comprehended within the purpose of thissection.
History: L. 1965, ch. 309, § 2; June 30.