Section 16(b) is designed to discourage corporate insiders from using inside information in making short-swing profits. This report concludes that greenmail payments that fall within the gambit of the section 16(b) requirements may well have to be disgorged to the corporation should a disgruntled shareholder bring suit. According to section 16(b), the purchases and sales or sales and purchases would have to occur within 6 months. The shareholder would have to own more than 10 percent of the corporation's stock both at the time of purchase and at the time of sale. The case of Foremost-McKesson may be interpreted to mean that the first purchase bringing the shareholder over the 10-percent ownership requirement would not be subject to section 16(b). The Steinberg case indicates that characterizing greenmail as aborted takeover expenses will not preclude application of the section 16(b) disgorgement requirement in a shareholder suit. 24 footnotes