ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT.
Souter, J., delivered the opinion for a unanimous Court.
JUSTICE SOUTER delivered the opinion of the Court.
Section 16(b) of the Securities Exchange Act of 1934, 48 Stat. 896, 15 U.S.C. § 78p(b),*fn1 imposes a general rule of strict liability on owners of more than 10% of a corporation's listed stock for any profits realized from the purchase and sale, or sale and purchase, of such stock occurring within a 6-month period. These statutorily defined "insiders," as well as the corporation's officers and directors, are liable to the issuer of the stock for their short-swing profits, and are subject to suit "instituted . . . by the issuer, or by the owner of any security of the issuer in the name and in behalf of the issuer . . . ." Ibid.
Our prior cases interpreting § 16(b) have resolved questions about the liability of an insider defendant under the statute.*fn2 This case, in contrast, requires us to address a plaintiff's standing under § 16(b) and, in particular, the requirements for continued standing after the institution of an action. We hold that a plaintiff, who properly "instituted [a § 16(b) action as] the owner of [a] security of the issuer," may continue to prosecute the action after his interest in the issuer is exchanged in a merger for stock in the issuer's new corporate parent.
In January 1987, respondent Ira L. Mendell filed a complaint under § 16(b) against petitioners in the United States District Court for the Southern District of New York, stating that he owned common stock in Viacom International, Inc. (International) and was suing on behalf of the corporation. He alleged that petitioners, a collection of limited partnerships, general partnerships, individual partners and corporations, "operated as a single unit" and were, for purposes of this litigation, a "single . . . beneficial owner of more than ten per centum of the common stock" of International. App. to Pet. for Cert. 40a-42a. Respondent claimed that petitioners were liable to International under § 16(b) for approximately $11 million in profits earned by them from trading in International's common stock between July and October 1986. Id., at 42a-43a. The complaint recited that respondent had made a demand upon International and its Board of Directors to bring a § 16(b) action against petitioners and that more than 60 days had passed without the institution of an action.
In June 1987, less than six months after respondent had filed his § 16(b) complaint, International was acquired by Arsenal Acquiring Corp., a shell corporation formed by Arsenal Holdings, Inc. (now named Viacom, Inc.) (Viacom) for the purpose of acquiring International. By the terms of the acquisition, Viacom's shell subsidiary was merged with International, which then became Viacom's wholly owned subsidiary and only asset. The stockholders of International received a combination of cash and stock in Viacom in exchange for their International stock.*fn3 Id., at 40a; App. 14-26.
As a result of the acquisition, respondent, who was a stockholder in International when he instituted this action, acquired stock in International's new parent corporation and sole stockholder, Viacom. Respondent amended his complaint to reflect the restructuring by claiming to prosecute the § 16(b) action on behalf of Viacom as well as International. App. to Pet. for Cert. 44a.
Following the merger, petitioners moved for summary judgment, arguing that respondent had lost standing to maintain the action when the exchange of stock and cash occurred, after which respondent no longer owned any security of International, the "issuer." The District Court held that § 16(b) actions "may be prosecuted only by the issuer itself or the holders of its securities," and granted the motion because respondent no longer owned any International stock.*fn4 App. to Pet. for Cert. 32a. The court concluded that only Viacom, as International's sole security holder, could continue to prosecute this action against petitioners. Id., at 33a.
A divided Court of Appeals reversed. 909 F.2d 724 (CA2 1990). The majority saw nothing in the text of § 16(b) to require dismissal of respondent's complaint. "The language of the statute speaks of the 'owner' of securities; but such language is not modified by the word 'current' or any like limiting expression. The statute does not specifically bar the maintenance of § 16(b) suits by former shareholders and Congress . . . could readily have eliminated such individuals." Id., at 730. Since the provisions of the statute were open to "interpretation," the court relied on the statute's remedial purposes in determining "whether the policy behind the statute is best served by allowing the claim." Id., at 728-729. The majority concluded that the remedial policy favored recognizing respondent's continued standing after the merger. "Permitting [respondent] to maintain this § 16(b) suit is not barred by the language of the statute or by existing case law, and it is fully consistent with the statutory objectives."*fn5 Id., at 731. The summary judgment for petitioners was reversed.
The dissent took issue with this analysis, finding it to be in conflict with prior decisions of the Second Circuit and at least one other. See Portnoy v. Kawecki Berylco Industries, Inc., 607 F.2d 765, 767 (CA7 1979); Rothenberg v. United Brands Co., CCH Fed. Sec. L. Rep. para. 96,045 (SDNY), aff'd mem., 573 F.2d 1295 (CA2 1977).
We granted certiorari, 498 U.S. (1991), to resolve this conflict and to determine whether a stockholder who has properly instituted a § 16(b) action to recover profits from a corporation's insiders may continue to prosecute that action after a merger involving the issuer results in exchanging the ...