Mr. Justice Black
delivered the opinion of the Court.
The petitioner Blau, a stockholder in Tide Water Associated Oil Company, brought this action in a United States District Court on behalf of the company under § 16 (b) of the Securities Exchange Act of 1934 to recover with interest “short swing” profits, that is, profits earned within a six months’ period by the purchase and sale of securities, alleged to have been “realized” by respondents in Tide Water securities dealings. Respondents are Lehman Brothers, a partnership engaged in investment banking, securities brokerage and in securities trading for its own account, and Joseph A. Thomas, a member of Lehman Brothers and a director of Tide Water. The complaint alleged that Lehman Brothers “deputed . . . Thomas, to represent its interests as a director on the Tide Water Board of Directors,” and that within a period of six months in 1954 and 1955 Thomas, while representing the interests of Lehman Brothers as a director of Tide Water and “by reason of his special and inside knowledge of the affairs of Tide Water, advised and caused the defendants, Lehman Brothers, to purchase and sell 50,000 shares of . . . stock of Tide Water, realizing profits thereon which did not inure to and [were] not recovered by Tide Water.”
The case was tried before a district judge without a jury. The evidence showed that Lehman Brothers had in fact earned profits out of short-swing transactions in Tide Water securities while Thomas was a director of that company. But as to the charges of deputization and wrongful use of “inside” information by Lehman Brothers, the evidence was in conflict.
First, there was testimony that respondent Thomas had succeeded Hertz, another Lehman partner, on the board of Tide Water; that Hertz had “joined Tidewater Company thinking it was going to be in the interests of Lehman Brothers”; and that he had suggested Thomas as his successor partly because it was in the interest of Lehman. There was also testimony, however, that Thomas, aside from having mentioned from time to time to some of his partners and other people that he thought Tide Water was “an attractive investment” and under “good” management, had never discussed the operating details of Tide Water affairs with any member of Lehman Brothers; that Lehman had bought the Tide Water securities without consulting Thomas and wholly on the basis of public announcements by Tide Water that common shareholders could thereafter convert their shares to a new cumulative preferred issue; that Thomas did not know of Lehman's intent to buy Tide Water stock until after the initial purchases had been made; that upon learning about the purchases he immediately notified Lehman that he must be excluded from “any risk of the purchase or any profit or loss from the subsequent sale”; and that this disclaimer was accepted by the firm.
From the foregoing and other testimony the District Court found that "there was no evidence that the firm of Lehman Brothers deputed Thomas to represent its interests as director on the board of Tide Water” and that there had been no actual use of inside information, Lehman Brothers having bought its Tide Water stock “solely on the basis of Tide Water’s public announcements and without consulting Thomas.”
On the basis of these findings the District Court refused to render a judgment, either against the partnership or against Thomas individually, for the $98,686.77 profits which it determined that Lehman Brothers had realized, holding:
“The law is now well settled that the mere fact that a partner in Lehman Brothers was a director of Tide Water, at the time that Lehman Brothers had this short swing transaction in the stock of Tide Water, is not sufficient to make the partnership liable for the profits thereon, and that Thomas could not be held liable for the profits realized by the other partners from the firm’s short swing transactions. Rattner v. Lehman, 2 Cir., 1952, 193 F. 2d 564, 565, 567. This precise question was passed upon in the Rattner decision.” 173 F. Supp. 590, 593.
Despite its recognition that Thomas had specifically waived his share of the Tide Water transaction profits, the trial court nevertheless held that within the meaning of § 16 (b) Thomas had “realized” $3,893.41, his proportionate share of the profits of Lehman Brothers. The court consequently entered judgment against Thomas for that amount but refused to allow interest against him. On appeal, taken by both sides, the Court of Appeals for the Second Circuit adhered to the view it had taken in Rattner v. Lehman, 193 F. 2d 564, and affirmed the District Court’s judgment in all respects, Judge Clark dissenting. 286 F. 2d 786. The Securities and Exchange Commission then sought leave from the Court of Appeals en banc to file an amicus curiae petition for rehearing urging the overruling of the Rattner case. The Commission’s motion was denied, Judges Clark and Smith dissenting. We granted certiorari on the petition of Blau, filed on behalf of himself, other stockholders and Tide Water, and supported by the Commission. 366 U. S. 902. The questions presented by the petition are whether the courts below erred: (1) in refusing to render a judgment against the Lehman partnership for the $98,686.77 profits they were found to have “realized” from their “short-swing” transactions in Tide Water stock, (2) in refusing to render judgment against Thomas for the full $98,686.77 profits, and (3) in refusing to allow interest on the $3,893.41 recovery allowed against Thomas.
Petitioner apparently seeks to have us decide the questions presented as though he had proven the allegations of his complaint that Lehman Brothers actually deputized Thomas to represent its interests as a director of Tide Water, and that it was his advice and counsel based on his special and inside knowledge of Tide Water’s affairs that caused Lehman Brothers to buy and sell Tide Water’s stock. But the trial court found otherwise and the Court of Appeals affirmed these findings. Inferences could perhaps have been drawn from the evidence to support petitioner’s charges, but examination of the record makes it clear to us that the findings of the two courts below were not clearly erroneous. Moreover, we cannot agree with the Commission that the courts’ determinations of the disputed factual issues were conclusions of law rather than findings of fact. We must therefore decide whether Lehman Brothers, Thomas or both have an absolute liability under § 16 (b) to pay over all profits made on Lehman’s Tide Water stock dealings even though Thomas was not sitting on Tide Water’s board to represent Lehman and even though the profits made by the partnership were on its own initiative, independently of any advice or “inside” knowledge given it by director Thomas.
First. The language of § 16 does not purport to impose its extraordinary liability on any “person,” “fiduciary” or not, unless he or it is a “director,” “officer” or “beneficial owner of more than 10 percentum of any class of any equity security . . . which is registered on a national securities exchange.” Lehman Brothers was neither an officer nor a 10% stockholder of Tide Water, but petitioner and the Commission contend that the Lehman partnership is or should be treated as a director under § 16 (b).
(a) Although admittedly not “literally designated” as one, it is contended that Lehman is a director. No doubt Lehman Brothers, though a partnership, could for purposes of § 16 be a “director” of Tide Water and function through a deputy, since § 3 (a)(9) of the Act provides that “ 'person’ means . . . partnership” and § 3 (a) (7) that “ 'director’ means any director of a corporation or any person performing similar functions with respect to any organization, whether incorporated or unincorporated.” Consequently, Lehman Brothers would be a director of Tide Water, if as petitioner’s complaint charged Lehman actually functioned as a director through Thomas, who had been deputized by Lehman to perform a director’s duties not for himself but for Lehman. But the findings of the two courts below, which we have accepted, preclude such a holding. It was Thomas, not Lehman Brothers as an entity, that was the director of Tide Water.
(b) It is next argued that the intent of § 3 (a) (9) in defining “person” as including a partnership is to treat a partnership as an inseparable entity. Because Thomas, one member of this inseparable entity, is an “insider,” it is contended that the whole partnership should be considered the “insider.” But the obvious intent of §3(a)(9), as the Commission apparently realizes, is merely to make it clear that a partnership can be treated as an entity under the statute, not that.it must be. This affords no reason at all for construing the word “director” in § 16 (b) as though it read “partnership of which the director is a member.” And the fact that Congress provided in § 3 (a) (9) for a partnership to be treated as an entity in its own right likewise offers no support for the argument that Congress wanted a partnership to be subject to all the responsibilities and financial burdens of its members in carrying on their other individual business activities.
(c) Both the petitioner and the Commission contend on policy grounds that the Lehman partnership should be held liable even though it is neither a director, officer, nor a 10% stockholder. Conceding that such an interpretation is not justified by the literal language of § 16 (b) which plainly limits liability to directors, officers, and 10% stockholders, it is argued that we should expand § 16 (b) to cover partnerships of which a director is a member in order to carry out the congressionally declared purpose “of preventing the unfair use of information which may have been obtained by such beneficial owner, director, or officer by reason of his relationship to the issuer_” Failure to do. so, it is argued, will leave a large and unintended loophole in the statute — one “substantially eliminating the great Wall Street trading firms from the statute’s operation.” 286 F. 2d, at 799. These firms it is claimed will be able to evade the Act and take advantage of the “inside” information available to their members as insiders of countless corporations merely by trading “inside” information among the various partners.
The argument of petitioner and the Commission seems to go so far as to suggest that § 16 (b)’s forfeiture of profits should be extended to include all persons realizing “short swing” profits who either act on the basis of “inside” information or have the possibility of “inside” information. One may agree that petitioner and the Commission present persuasive policy arguments that the Act should be broadened in this way to prevent “the unfair use of information” more effectively than can be accomplished by leaving the Act so as to require forfeiture of profits only by those specifically designated by Congress to suffer .those losses. But this very broadening of the categories of persons on whom these liabilities are imposed by the language of § 16 (b) was considered and rejected by Congress when it passed the Act. Drafts of provisions that eventually became § 16 (b) not only would have made it unlawful for any director, officer or 10% stockholder to disclose any confidential information regarding registered securities, but also would have made all profits received by anyone, “insider” or not, “to whom such unlawful disclosure” had been made recoverable by the company.
Not only did Congress refuse to give § 16 (b) the content we are now urged to put into it by interpretation, but with knowledge that in 1952 the Second Circuit Court of Appeals refused, in the Rattner case, to apply § 16 (b) to Lehman Brothers in circumstances substantially like those here, Congress has left the Act as it was. And so far as the record shows this interpretation of § 16 (b) was the view of the Commission until it intervened last year in this case. Indeed in the Rattner case the Court of Appeals relied in part on Commission Rule X-16A-3 (b) which required insider-partners to report only the amount of their own holdings and not the amount of holdings by the partnership. While the Commission has since changed this rule to require disclosure of partnership holdings too, its official release explaining the change stated that the new rule was “not intended as a modification of the principles governing liability for short-swing transactions under Section 16 (b) as set forth in the case of Rattner v. Lehman .. ..” Congress can and might amend § 16 (b) if the Commission would present to it the policy arguments it has presented to us, but we think that Congress is the proper agency to change an interpretation of the Act unbroken since its passage, if the change is to be made.
Second. The petitioner and the Commission contend that Thomas should be required individually to pay to Tide Water the entire $98,686.77 profit Lehman Brothers realized on the ground that under partnership law he is co-owner of the entire undivided amount and has therefore “realized” it all. “[O]nly by holding the partner-director liable for the entire short-swing profits realized by his firm,” it is urged, can “an effective prophylactic to the stated statutory policy ... be fully enforced.” But liability under § 16 (b) is to be determined neither by general partnership law nor by adding to the “prophylactic” effect Congress itself clearly prescribed in § 16 (b). That section leaves no room for judicial doubt that a director is to pay to his company only “any profit realized by him” from short-swing transactions. (Emphasis added.) It would be nothing but a fiction to say that Thomas “realized” all the profits earned by the partnership of which he was a member. It was not error to refuse to hold Thomas liable for profits he did not make.
Third. It is contended that both courts below erred in failing to allow interest on the recovery of Thomas’ share of the partnership profits. Section 16 (b) says nothing about interest one way or the other. This Court has said in a kindred situation that “interest is not recovered according to a rigid theory of compensation for money withheld, but is given in response to considerations of fairness. It is denied when its exaction would be inequitable.” Board of Commissioners v. United States, 308 U. S. 343, 352. Both courts below denied interest here and we cannot say that the denial was either so unfair or so inequitable as to require us to upset it.
Affirmed.
Mr. Justice Stewart took no part in the disposition of this case.
“For the purpose of preventing the unfair use of information which may have been obtained by such beneficial owner, director, or officer by reason of his relationship to the issuer, any profit realized by him from any purchase and sale, or any sale and purchase, of any equity security of such issuer (other than an exempted security) within any period of less than six months, unless such security was acquired in good faith in connection with a debt previously contracted, shall inure to and be recoverable by the issuer, irrespective of any intention on the part of such beneficial owner, director, or officer in entering into such transaction of holding the security purchased or of not repurchasing the security sold for a period exceeding six months. Suit to recover such profit may be instituted at law or in equity in any court of competent jurisdiction by the issuer, or by the owner of any security of the issuer in the name and in behalf of the issuer if the issuer shall fail or refuse to bring such suit within sixty days after request or shall fail diligently to prosecute the same thereafter; but no such suit shall be brought more than two years after the date such profit was realized. This subsection shall not be construed to cover any transaction where such beneficial owner was not such both at the time of the purchase and sale, or the sale and purchase, of the security involved, or any transaction or transactions which the Commission by rules and regulations may exempt as not comprehended within the purpose of this subsection.” 48 Stat. 896, 15 U. S. C. § 78p (b).
In 1956, after the purchase and sale in question, Lehman Brothers participated in the underwriting of some Tide Water bonds. Thomas handled this for Lehman and during the course of the matter discussed Tide Water affairs with the other members of Lehman.
In compliance with § 16 (a) and the rules and forms thereunder, see note 14, infra, Thomas filed with the SEC reports of the Lehman transactions in Tide Water stock and his disclaimer of those transactions.
In both courts below defendants claimed that Lehman’s profits should have been found to be much less than they were. Since the determination below has not been complained of here, it is not necessary to pass on those contentions.
In the two courts below it was contended both that Thomas, because of his disclaimer of all participation in these partnership transactions, had realized no profits at all, and also that, even if he did realize some profits the amount was less than that found. See the opinion of Judge Swan dissenting in part below. 286 F. 2d, at 793. We express no view on these questions since the Thomas judgment is not challenged here.
See § 16 (a), 48 Stat. 896, 15 U. S. C. § 78p (a).
48 Stat. 883, 15 U. S. C. § 78c (a) (9).
48 Stat. 883, 15 U. S. C. § 78c (a) (7).
The Commission’s brief says: “Therefore, when a member of a partnership holds a directorship with the knowledge and consent of his firm, it is entirely reasonable to consider the partnership as the 'director’ for the purposes of Section 16 (b).”
An “insider” for purposes of § 16 is an officer, director or 10% stockholder. See Cook and Feldman, Insider Trading Under the Securities Exchange Act, 66 Harv. L. Rev. 385, 399-404.
Mosser v. Darrow, 341 U. S. 267, and Lehman v. Civil Aeronautics Board, 93 U. S. App. D. C. 81, 209 F. 2d 289, cited by the Commission as comparable situations throw little if any light on the issues in this case. Those cases involved different facts and different statutes, statutes which themselves have different language, purpose and history from the statute here.
Thus, § 15 (b) of both H. R. 7852, and S. 2693, 73d Cong., 2d Sess. provided:
“(b) It shall be unlawful for any director, officer, or owner of securities, owning as of record and/or beneficially more than 5 per centum of any class of stock of any issuer, and security of which is registered on a national securities exchange ... (3) To disclose, directly or indirectly, any confidential information regarding or affecting any such registered security not necessary or proper to be disclosed as a part of his corporate duties. Any profit made by any person, to whom such unlawful disclosure shall have been made, in respect of any transaction or transactions in such registered security within a period not exceeding six months after such disclosure shall inure to and be recoverable by the issuer unless such person shall have had no reasonable ground to believe that the disclosure was confidential or was made not in the performance of corporate duties. . . .” (Emphasis added.)
As to the meaning ascribed to this provision, see Hearings before the Committee on Banking and Currency on S. Res. No. 84, 72d Cong., 2d Sess., and S. Res. Nos. 56 and 97, 73d Cong., 1st and 2d Sess. 6555, 6558, 6560-6561; Hearings before Committee on Interstate and Foreign Commerce on H. R. 7852 and H. R. 8720, 73d Cong., 2d Sess. 135-137. These hearings seem to indicate that the provision was omitted from the final act because of anticipated problems of administration. See also Smolowe v. Delendo Corp., 136 F. 2d 231, 236; Rattner v. Lehman, 193 F. 2d 564.
See Seventeenth Annual Report of the Securities and Exchange Commission, p. 62 (1962); Eighteenth Annual Report, p. 79 (1963). These reports were submitted to Congress.
Securities and Exchange Commission Release No. 4754 (September 24, 1952). Rule X-16A-3 was again amended, effective March 9, 1961, to delete any requirements that a partner report the amount of the issuer’s securities held by the partnership but the substance of the rule is still contained in the Commission’s instructions to its Forms 3 and 4 which are used for making the reports required under § 16 (a).
What follows is an opinion from the Supreme Court of the United States. Your task is to determine the bases on which the Supreme Court rested its decision with regard to the legal provision that the Court considered in the case. Consider "judicial review (national level)" if the majority determined the constitutionality of some action taken by some unit or official of the federal government, including an interstate compact. Consider "judicial review (state level)" if the majority determined the constitutionality of some action taken by some unit or official of a state or local government. Consider "statutory construction" for cases where the majority interpret a federal statute, treaty, or court rule; if the Court interprets a federal statute governing the powers or jurisdiction of a federal court; if the Court construes a state law as incompatible with a federal law; or if an administrative official interprets a federal statute. Do not consider "statutory construction" where an administrative agency or official acts "pursuant to" a statute, unless the Court interprets the statute to determine if administrative action is proper. Consider "interpretation of administrative regulation or rule, or executive order" if the majority treats federal administrative action in arriving at its decision.Consider "diversity jurisdiction" if the majority said in approximately so many words that under its diversity jurisdiction it is interpreting state law. Consider "federal common law" if the majority indicate that it used a judge-made "doctrine" or "rule; if the Court without more merely specifies the disposition the Court has made of the case and cites one or more of its own previously decided cases unless the citation is qualified by the word "see."; if the case concerns admiralty or maritime law, or some other aspect of the law of nations other than a treaty; if the case concerns the retroactive application of a constitutional provision or a previous decision of the Court; if the case concerns an exclusionary rule, the harmless error rule (though not the statute), the abstention doctrine, comity, res judicata, or collateral estoppel; or if the case concerns a "rule" or "doctrine" that is not specified as related to or connected with a constitutional or statutory provision. Consider "Supreme Court supervision of lower federal or state courts or original jurisdiction" otherwise (i.e., the residual code); for issues pertaining to non-statutorily based Judicial Power topics; for cases arising under the Court's original jurisdiction; in cases in which the Court denied or dismissed the petition for review or where the decision of a lower court is affirmed by a tie vote; or in workers' compensation litigation involving statutory interpretation and, in addition, a discussion of jury determination and/or the sufficiency of the evidence.