{ "tool_id": "art-573-section16b-short-swing-profit-recompute", "tool_version": "1.0.0", "display_name": "Section 16(b) Short-Swing Profit Recomputation", "mcp_name": "recompute_section16b_profit", "mandate_type": "analytics_mandate", "wave": 96, "gpu": false, "url": "https://ainumbers.co/chaingraph/art-573-section16b-short-swing-profit-recompute.html", "description": "Recomputes an Exchange Act Section 16(b) short-swing profit figure from a caller-declared list of an insider's own transactions in the issuer's equity security, then compares the recomputed figure against a number a demand letter claims where one is supplied. Section 16(b) demand letters are typically built by a plaintiff firm scanning Form 4 filings for a lowest-price-in, highest-price-out match; the recipient side, whether the insider or the issuer's counsel, has had no deterministic free tool to independently recompute that number, which this node is. Matching uses the Smolowe v. Delvag Reinsurance / Gratz v. Claughton maximal-recovery construction: the lowest-priced eligible purchase is repeatedly paired against the highest-priced eligible sale within a day-count approximation of the statutory less-than-six-months window, a pairing that would produce a loss is skipped rather than netted against a profitable one, and every matched pair is reported with its own purchase date, sale date, share count and profit. A transaction carrying a caller-declared exemption flag, such as a Rule 16b-3 approved-plan exemption, is excluded from matching and reported separately; this node makes no independent exemption determination. It also carries an informational Section 16(a) and 16(b) applicability check over caller-declared officer, director, and ten-percent-owner status, including the Holding Foreign Insiders Accountable Act asymmetry: a foreign private issuer's officers and directors became Section 16(a) reporting filers under HFIAA without becoming subject to Section 16(b) short-swing profit-recovery liability, which this node flags without gating the arithmetic on it. The verdict is MATCHES, DIVERGES, or INDETERMINATE, and INDETERMINATE covers both an empty transaction list and a run where no demand-letter figure was supplied to compare against; neither case is guessed toward agreement. Money is fixed point in integer minor units throughout with two-decimal display. Cites Exchange Act Section 16(b) and 16(a), Rule 16b-3, Rule 3a12-3, and HFIAA, each dated for re-verification against primary text, and names the matching algorithm and the six-month day-count approximation as research findings needing independent re-verification rather than established facts. Stated boundary: this is not legal advice, no computed figure resolves a matchability or exemption dispute, and a Rule 144 volume-limitation check is a named follow-on tool, not computed here.", "input_schema_ref": "chaingraph/art-573-section16b-short-swing-profit-recompute.html#manifest", "consumes": [], "feeds": [], "status": "live", "conformance_fixtures": true, "compute_capability": "server", "compute_images": [ { "system": "sha256-source", "image_id": "sha256:2bf576ae353041e722a9e64447d9484503c9d7208b320a9338562368f15e41d2", "valid_from": "2026-07-10" }, { "system": "risc0", "image_id": "sha256:a1a0bc89b5b1febaeda3519f6dbade0fa5ac16beeb143c4e1b01689573567bc6", "valid_from": "2026-08-07" } ], "export_capability": [ "json" ], "compute_proof_ready": "ready", "deferred_reason": "New shard; awaiting the async GPU proving queue (S18 steady-state).", "compute_proof": { "type": "ZkVmReceipt", "system": "risc0", "receiptFormat": "groth16-bn254", "imageId": "sha256:a1a0bc89b5b1febaeda3519f6dbade0fa5ac16beeb143c4e1b01689573567bc6", "seal": "GGAQBHxmGg2D5ZplSEjx0g0q4szg9an+dRF8nX/QBqstuoSdfkSLLeo1yjZsBDvk9nhAbbs19641UcPvah3HOSb3k8UhRvIOx16llJXZ0lz/MpQ5wr1FfXjBWP5hqsn0GkCoF1/0MPQ3gfud/V8hMuSBDHo9JLRJskM5+L32CB4UbHvFs+KkD3vqfllQyWoITfIyGmObJ+EqlaUWPjc0YgtjOmdjMRAi0zxcyeZazlFKbxIvf2ywzJqDrD2wLqRQDkENbxUE2NWHJntw68mSm1YNh9a8rMZpub1ktt9e/3cu4KyjunSbHr2sGzPOogvzs8LT3thT3S27R8W7mTwvTA==", "journal": { "chaingraph_version": "0.4.0", "kernel_digest": "sha256:2bf576ae353041e722a9e64447d9484503c9d7208b320a9338562368f15e41d2", "output": { "citations": { "hfiaa": { "detail": "Makes officers and directors of a foreign private issuer Section 16(a) reporting filers for the first time. Expressly does NOT extend Section 16(b) short-swing profit-recovery liability to that population, and does not disturb the Rule 3a12-3(b) exemption for a 10%-owner who is not also an officer or director. Re-verify against primary text before relying on it (research finding, not fact).", "source": "Holding Foreign Insiders Accountable Act, FY2026 NDAA, signed 2025-12-18" }, "rule_16b3": { "detail": "Exempts certain transactions between an issuer and its officers/directors under an approved plan (e.g. grants, tax-withholding transactions) from Section 16(b) matching. This kernel excludes a transaction from matching only when the caller declares an exemption_flags entry for it; it makes no independent exemption determination.", "source": "17 CFR 240.16b-3" }, "rule_3a12_3": { "detail": "Historically exempted a foreign private issuer and its officers, directors, and 10%-owners from Section 16 (both (a) and (b)) entirely.", "source": "17 CFR 240.3a12-3(b)" }, "section_16a_general": { "detail": "Reporting obligation for officers, directors, and beneficial owners of more than 10% of a registered equity security.", "source": "Securities Exchange Act of 1934 Sec. 16(a), 15 U.S.C. Sec. 78p(a)" }, "section_16b": { "detail": "Strict-liability disgorgement of any profit realized by a Section 16 insider from any purchase and sale, or sale and purchase, of the issuer's equity security within a period of less than six months.", "source": "Securities Exchange Act of 1934 Sec. 16(b), 15 U.S.C. Sec. 78p(b)" }, "smolowe_maximal_recovery": { "detail": "The \"lowest price in, highest price out\" matching construction, maximizing recovery to the corporation rather than measuring the insider's actual realized gain; losses on other pairings are never netted against a profitable pairing. Re-verify against primary case text before relying on it (research finding, not fact).", "source": "Smolowe v. Delvag Reinsurance Co., 136 F.2d 231 (2d Cir. 1943); Gratz v. Claughton, 187 F.2d 46 (2d Cir. 1951)" } }, "comparison_basis": "The recomputed matched-pair total is derived here from the declared transaction list using the lowest-in/highest-out construction; it is not read from the demand letter. A comparison is only meaningful because the two sides have independent provenance.", "currency": "USD", "demand_letter_claimed_profit_display": "1400.00", "demand_letter_claimed_profit_minor_units": 140000, "demand_letter_supplied": true, "difference_display": "0.00", "difference_minor_units": 0, "excluded_transactions": [], "fence": "This is not legal advice. It does not compute a Rule 144 volume-limitation check (a named follow-on tool). Matching uses the lowest-in/highest-out construction over caller-declared transactions and a day-count approximation of the six-month window; a declared exemption excludes a transaction from matching without this kernel independently determining whether that exemption applies. No computed figure resolves a matchability or exemption dispute, which is counsel's.", "indeterminate_reason": null, "insider_ref": "SYNTH-INSIDER-001", "insider_status": { "foreign_private_issuer": false, "officer_or_director": true, "ten_pct_owner": false }, "issuer_ref": "SYNTH-ISSUER-CO", "matched_pairs": [ { "day_gap": 81, "profit_display": "1000.00", "profit_minor_units": 100000, "purchase_date": "2026-01-10", "purchase_price_display": "10.00", "purchase_price_minor_units": 1000, "purchase_txn_id": "txn-1", "sale_date": "2026-04-01", "sale_price_display": "20.00", "sale_price_minor_units": 2000, "sale_txn_id": "txn-3", "shares_matched": 100, "window_basis": "81 day(s) apart, matched against a 183-day approximation of the statutory less-than-six-months window (day-count approximation, not calendar-month arithmetic; see not_proven)." }, { "day_gap": 50, "profit_display": "400.00", "profit_minor_units": 40000, "purchase_date": "2026-02-10", "purchase_price_display": "12.00", "purchase_price_minor_units": 1200, "purchase_txn_id": "txn-2", "sale_date": "2026-04-01", "sale_price_display": "20.00", "sale_price_minor_units": 2000, "sale_txn_id": "txn-3", "shares_matched": 50, "window_basis": "50 day(s) apart, matched against a 183-day approximation of the statutory less-than-six-months window (day-count approximation, not calendar-month arithmetic; see not_proven)." } ], "minor_unit_exponent": 2, "not_proven": [ { "detail": "This kernel recomputes a matchable-pair short-swing profit figure from caller-declared transaction facts. It is not a substitute for counsel, and no computed figure resolves a matchability or exemption dispute.", "item": "Not legal advice" }, { "detail": "The statutory \"less than six months\" boundary is approximated here as strictly less than 183 days apart rather than true calendar-month arithmetic. A pair straddling the 182/183-day boundary needs independent calendar-month verification.", "item": "Six-month window is a day-count approximation" }, { "detail": "The lowest-in/highest-out maximal-recovery construction is the widely cited Smolowe/Gratz heuristic, but this kernel's citation of it was not re-derived from primary case text at build time (research finding, not fact per the build row).", "item": "Algorithm re-verification" }, { "detail": "A transaction is excluded from matching only because the caller declared an exemption_flags entry for it (e.g. Rule 16b-3). This kernel makes no independent determination that any exemption in fact applies.", "item": "Exemption determinations are caller-declared" }, { "detail": "Whether a sale complies with Rule 144 volume limitations is out of scope; it is a named follow-on tool, not computed here.", "item": "Rule 144 volume limitation" }, { "detail": "Every transaction's date, price, and share count, and the insider_status flags, are caller-supplied and asserted, not independently verified against EDGAR Form 4/5 filings.", "item": "Input accuracy" } ], "note": "Deterministic Section 16(b) matchable-pair short-swing profit recompute over a caller-declared transaction list. Single-run and stateless: it holds no records, runs on no schedule, and retains nothing.", "purchase_count": 2, "rationale": [ "Section 16(b) matchable-pair recompute for insider reference SYNTH-INSIDER-001 on issuer reference SYNTH-ISSUER-CO.", "3 of 3 declared transaction(s) were usable and non-exempt; 0 were excluded (unusable input or a declared exemption).", "2 purchase(s) and 1 sale(s) were eligible for matching. Matching applied the lowest-in/highest-out construction: the lowest-priced eligible purchase was paired against the highest-priced eligible sale, repeatedly, within a 183-day approximation of the statutory less-than-six-months window, and a pairing that would produce a loss was skipped rather than netted.", "2 matched pair(s) were found, for a total recomputed profit of 1400.00 USD.", "50 purchased share(s) and 0 sold share(s) remained unmatched (no eligible profitable in-window counterparty).", "Domestic insider: officer/director or 10%-owner status makes this insider both a Section 16(a) filer and subject to Section 16(b) short-swing profit-recovery liability.", "The independently recomputed matched-pair total agrees with the demand letter's claimed profit of 1400.00 USD.", "This is not legal advice. The six-month window applied here is a day-count approximation of the statutory calendar-month boundary, and no exemption was independently determined -- both are named in not_proven. No computed figure resolves a matchability or exemption dispute." ], "rejected_inputs": [], "sale_count": 1, "section_16a_applicability": { "basis": "Domestic insider: officer/director or 10%-owner status makes this insider both a Section 16(a) filer and subject to Section 16(b) short-swing profit-recovery liability.", "is_16a_filer": true, "is_16b_liable": true }, "six_month_window_day_threshold": 183, "total_profit_display": "1400.00", "total_profit_minor_units": 140000, "transaction_count": 3, "unmatched_purchase_shares": 50, "unmatched_sale_shares": 0, "usable_transaction_count": 3, "verdict": "MATCHES" } } } }