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invest (e.g., an issuer stock fund, a bond fund, or a
money market fund). Plan participants typically are
given the opportunity to engage in ‘fund-switching’
transactions, permitting the transfer of assets from
one fund to another, at periodic intervals. Plan
participants also commonly have the right to withdraw
their investments in cash from a fund containing equity
securities of the issuer. Fund-switching transactions
involving an issuer equity securities fund and cash
distributions from these funds may present
opportunities for abuse because the investment decision
is similar to that involved in a market transaction.
Moreover, the plan may buy and sell issuer equity
securities in the market in order to effect these
transactions, so that the real party on the other side
of the transaction is not the issuer but instead a
market participant. [Fn. ref. omitted.]
Ownership Reports and Trading by Officers, Directors and
Principal Security Holders, Exchange Act Release No. 34-37260, 61
Fed. Reg. 30376, 30379 (June 14, 1996).
Although petitioner exercised discretion in granting ISOs to
himself, in exercising the ISOs, and in disposing of the
underlying shares, petitioner’s activities were not undertaken
under the auspices of an employee benefit plan as contemplated
under SEC rule 16b-3, nor did his activities result in an
intrafund transfer or a cash distribution from a plan.
Accordingly, we conclude the discretionary transaction provisions
are not relevant to the question whether petitioner was subject
to a suit under section 16(b) of the Exchange Act during 2000.
The period during which petitioner was subject to liability
under section 16(b) of the Exchange Act is directly addressed in
SEC rule 16b-3(d)(3) and SEC rule 16(b)-6(a) and (b), 17 C.F.R.
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