Given the hubbub over the SEC’s new EDGAR Next, I thought it would be useful to provide a FAQ explaining the rationale for Section 16 to a new director or officer who is unfamiliar with the concept.

Section 16(b) of the Exchange Act provides that a statutory insider who earns “short-swing” profits by buying and selling or selling and buying within a six-month period may be required to disgorge ...

Section 16, part of the Securities Exchange Act of 1934, establishes filing requirements for directors, officers, and major shareholders of public companies to promote transparency and prevent fraud.