What is required for strict liability for short-swing trading profits?

In the context of strict liability for short-swing trading profits, the requirement for a corporation to be classified as a reporting corporation or to possess significant assets is crucial. This is because strict liability under the Securities Exchange Act of 1934 applies specifically to corporate insiders who engage in short-swing trading — which is the buying and selling of a company’s stock within a six-month window.

When a corporation is a reporting company, it is subject to greater regulatory oversight and has stricter disclosure obligations. This includes filing regular reports with the SEC, thereby making the details about its financial health and stock performance publicly available. The framework of strict liability helps ensure that insiders cannot exploit non-public information for personal gain by strictly regulating trades based on stock price movements that might be affected by their insider knowledge.

Furthermore, the threshold of having significant assets typically underscores the size and significance of the company in the marketplace, justifying the application of strict liability to prevent any substantial unfair advantages held by insiders.

Thus, the requirements of being either a reporting corporation or having significant assets align with the principles behind strict liability in the domain of securities law.