So I read Section 16b rule as : "requires company insiders to return any profits made from the purchase and sale of company stock if both transactions occur within a six-month period." Time A: Let's say insider holding 30% for a long time 5 years plus of a small cap 20 Million Market cap stock. Time B: The stock was at lingering at all time low and insiders accumulated say 10% more say 7 months back. Time C: This week (GME effect), this random stock is squeezed and shooting 10 times higher. Insider knows, it can not sustain so they sell 20% stock. Now this should be ok as Buy-Sell period is more than 6 months. A-C period > 6 Months, as well B-C period > 6 months. Correct? Time D : After they sell, the stock return to normal price range. The insider buy again 20% stock within 2 weeks. Now C to D period < 6 months. Is there anything that stops them from buying again within 6 months like this? What stops a CEOs from a small cap (<20M) company to profit like this? Like takeover risk?
any comments Guys? Just trying to understand what a small cap CEO can or can not do as manipulation. Have seen it happens all the time with low float stocks.