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remained liable under section 16(b) of the Exchange Act until
approximately June 2003.
Petitioner’s reliance on the discretionary transaction
provisions contained in SEC rule 16b-3 is misplaced. A
discretionary transaction is defined in SEC rule 16b-3(b)(1) as a
transaction pursuant to an employee benefit plan that (1) is at
the volition of a plan participant; (2) is not made in connection
with the participant’s death, disability, retirement, or
termination of employment; (3) is not required to be made
available to a plan participant pursuant to the Internal Revenue
Code; and (4) results in either an intraplan transfer involving
an issuer equity securities fund, or a cash distribution funded
by a volitional disposition of an issuer equity security. SEC
rule 16b-3(f) provides that a discretionary transaction shall be
exempt from section 16(b) of the Exchange Act only if an election
effecting an acquisition (or disposition) is made at least 6
months following the date of the most recent disposition (or
acquisition), as the case may be.
A review of the SEC’s release adopting SEC rule 16b-3
reveals the exemption for discretionary transactions was targeted
at opportunities for abuse arising from so-called fund-switching
transactions effected within contributory employee benefit plans.
In particular, the SEC stated in pertinent part:
Many contributory employee benefit plans permit a
participant to choose one of several funds in which to
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