Court Adopts Bifurcated Approach to Treatment of Hybrid Securities

In their Second Circuit Review, Martin Flumenbaum and Brad S. Karp, members of Paul, Weiss, Rifkind, Wharton & Garrison, write that the Second Circuit's decision in 'Analytical Securities' provides some helpful clarifications regarding the debt and borderline transaction exceptions to §16(b)'s prohibition of short-swing insider trading. But more importantly, they say, this decision resolves disagreement within the district courts about the proper treatment of hybrid securities under the Exchange Act.

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