Yet, the statute offers an exemption to 16(b) transactions if the issuer’s board approves the transaction, according to the opinion.
Challenge to Board Approval Requirement
The defendants contested the lower court’s stance that the Amyris board had to greenlight transactions with the specific intent of evading Section 16(b) liability. The panel countered, asserting that the district court had erroneously leaned on an SEC no-action letter, emphasizing that such letters do not constitute binding regulations.
“The exemption does not include a purpose-specific approval requirement,” emphasized U.S. Circuit Judge Milan D. Smith Jr., writing for the panel. “Simply put, nothing in the regulation indicates that the board must approve the transaction for the specific purpose of exempting it from Section 16(b) liability.”
Amyris Shareholder Suit : Rare Consensus Among Parties
Judge Smith noted the rarity of unanimous agreement among the involved parties, with both Roth and the SEC acknowledging the absence of a purpose-specific approval requirement. The panel’s decision, echoing this sentiment, adds to the legal burstiness of the case.
Allegations and Board Knowledge
Roth initiated the derivative suit in June 2021, targeting John Doerr and his wife, Ann Doerr, trustees of Vallejo Ventures Trust, a Foris Ventures member. The suit alleges that Amyris’ board greenlit multiple transactions between April 2019 and January 2020, leading to purported short-swing profits of at least $6.4 million.
