The recently promulgated SEC rules and judicial precedent impacting upon the parameters of section 16(b) are the focus of this article. First, this work will address the issue of standing to sue under section 16(b), focusing on the ramifications of the recent Supreme Court decision in Gollust v. Mendelt as well as other cases. As will be seen, an allegedly aggrieved shareholder’s standing to sue remains unresolved in a number of critical situations. Second, the applicable section 16(b) statute of limitations will be addressed. The statute, while providing that no suit may be commenced more than two years after the alleged short-swing trading, leaves open the question whether equitable tolling principles apply. In Lampf v. Gilbertson, the Supreme Court, construing the statute of limitations under section 10(b) of the Exchange Act, adopted a limitations period precluding the application of equitable tolling. Hence, the important issue arises, which this aspect of the Article seeks to resolve, whether Lampf's rationale should be extended, to section 16(b) actions. Third, the work will examine the SEC's treatment of derivative securities, such as stock options, under the section 16 regulatory framework. As will be discussed, the SEC, pursuant to its recent rule amendments, exempts from coverage, after a six-month holding period, an insider's exercise of an option and the immediate sale of the underlying security. This position leaves the door open for insider abuse and represents a rather ironic step for the Commission to take in view of its declared "war" on insider trading. An even more puzzling SEC action is the subject of the Article's final Part, namely, the Commission's deletion from section 16's scope the purchase (or sale) by an individual before she becomes an officer or director and the subsequent offsetting transaction after such person attains insider status. This position conflicts with every major court decision and raises issues relating to both the validity and wisdom of the SEC's action. Hence, during a time in which insider trading is being vigorously prosecuted by the government, the Commission has relaxed a number of rules in this area. The SEC's actions, in conjunction with the ramifications of certain recent Supreme Court and other decisions, present an opportunity to provide an in-depth analysis focusing on the viability of the section 16 framework from both a legal and policy perspective
