Tax-withholding transactions were not short-swing profits

By Rodney F. Tonkovic, J.D. A Tenth Circuit panel affirmed a district court judgment that alleged short-swing profits were exempt from disgorgement. Because the tax-withholding transactions at issue were both non-discretionary and approved in advance, they satisfied an exemption from Section 16(b)'s general requirement that short-swing profits be disgorged. The decision was made on the briefs, without oral argument, and is not binding precedent (Olagues v. Muncrief, January 16, 2019, per curiam). This derivative action was brought by a shareholder of WPX Energy, Inc. against the company and two of its officers. As part of a compensation plan, WPX executed restricted stock unit (RSU) agreements with the officers, with the right to receive the shares on predetermined vesting dates. When the shares vested, they triggered certain tax-withholding requirements outlined in the RSU agreements, and WPX withheld a portion of the officers' shares to pay the tax obligations…

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