Replies to post #95592 on NanoViricides Inc. (NNVC)

[Rawnoc]

Sarbruer: This was from NNVC's own release:

On Monday, February 24, 2014, the Company’s Corporate Counsel advised Dr. Diwan that this repurchase fell within the limitations of Section 16(b) of the Securities and Exchange Act of 1934, which relates to “short term sales” by “insiders” of a public reporting Company. The net profits from the sale at a higher price and the later repurchase at a lower price were determined to be $83,900. As a result, Dr. Diwan has disgorged the resulting net profits of $83,900 to the Company on Tuesday, February 25, 2014.

There is no mischaracterization. These are facts.

His motives for this are known only to him. Not you or me. But remember, his previous selling to fund the lab did significantly more damage to the SP than the Seeking Alpha article, so it is difficult to believe he was repurchasing to "maintain shareholder value" of the other shareholders.

He sold high and repurchased low and that is illegal. His lawyers caught it and he paid the profits back to the company.

How is that a mischaracterization?

[loanranger]

It's not a mischaracterization...the phrase was meant to describe, not define, the violative portion of the transaction....which includes the sale of shares and their repurchase (aka a "short sale") within 6 months in a subsequent transaction.

An insider is prohibited from “short-swing” transactions (i.e., a sale and purchase of company stock within a 6-month period). The insider is required to surrender to the company all profits if such a “matching” transaction occurs.
http://www.meridiancp.com/images/uploads/6_Section_16b-Insider_Trading_Rules.pdf

A short swing rule restricts officers and insiders of a company from making short-term profits at the expense of the firm. It is part of United States federal securities law, and is a prophylactic measure intended to guard against so-called insider trading.[1] The rule mandates that if an officer, director, or any shareholder holding more than 10% of outstanding shares of a publicly traded company makes a profit on a transaction with respect to the company's stock during a given six month period, that officer, director, or shareholder must pay the difference back to the company.[2]
http://en.wikipedia.org/wiki/Short_swing


The fact that the transaction requiring disgorgement included a sale of shares at a higher price that preceded the re-purchase of shares at a lower price isn't the critical issue. If, during any 6 month period, any of the above described beneficial owners bought shares and later sold them for a profit (aka a "long" transaction), that too would require a disgorgement of those profits.


I apologize for disturbing your sensibilities with the use of the offending phrase. However, in context, it wasn't a mischaracterization at all. It was not a comment on Diwan's intent but merely a factual description that fit the transaction.