Limited partnerships that delegate voting and investment control over their securities portfolios to their general partners’ agents are still considered insiders for purposes of insider trading liability, the U.S. Court of Appeals for the Second Circuit ruled on Jan. 24.
The circuit found that two limited partnerships were “beneficial owners” of more than 10 percent of stock in WPCS International Inc. and could be held liable for insider trading under Section 16(b) of the Securities Exchange Act of 1934, 15 U.S.C. §78p(b), despite their lack of control.
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