(concurring in part and dissenting in part):
I disagree with the majority that Seurlock should be exonerated from liability for short-swing profits realized from the sale of Susquehanna stock. I agree with the majority, although on different grounds, that Rumbel should not be held liable for the profits he realized on the sale of shares of Susquehanna within six months of their acquisition. I agree with the majority, although for different reasons, that Glenn L. Sloane should not be held liable for profits from his stock transactions on the present record, and I would remand for further proceedings. I agree that Arthur W. Sloan should be held liable for his short-swing profits, but again for reasons which differ from those deemed controlling by the majority. Finally, I would vacate the interest award, but, unlike the majority, I would remand this question to the district court for re-determination in the exercise of its discretion. I therefore concur in the judgment in part, and respectfully dissent in part.
I.
My differences with the majority, except on the issue of interest, stem from my reading of Kern. I think that the majority misreads and misapplies its holdings, all to the end that it reaches erroneous conclusions or assigns erroneous reasons for correct conclusions with respect to each of the defendants.
The majority and I are agreed that Kern stands for the general proposition that in the ease of “unorthodox” trans*354actions, such as mergers, recapitaliza-tions, conversions, etc., the issue of whether such transactions were “purchases” or “sales”- within the meaning of § 16(b) is to be resolved by determining “whether the transaction may serve as a vehicle for the evil which Congress sought to prevent — the realization of short-swing profits based upon access to inside; information.” 411 U.S. at 594, 93 S.Ct. at 1744. Kern was a case in which the Supreme Court held that the defendant corporation, which had become a ten percent beneficial owner of an issuer by virtue of a cash tender offer take-over bid, had not “sold” its stock in the issuer when it exchanged such stock, pursuant to the terms of a defensive merger arranged by the target issuer with a third company. The Court also held that an option, granted by the defendant corporation to the third company prior to the approval of the merger, to purchase any shares the defendant corporation might receive pursuant to the defensive merger, exercisable after six months, was not a “sale” within the meaning of § 16(b). These holdings resulted from findings that the defendant corporation, because of its antagonistic posture vis-a-vis the issuer’s management, had no effective access to inside information concerning the issuer, and that the defendant had no effective control over when or whether the merger transaction asserted to be a “sale” would take place. Thus, there was no possibility of speculative abuse by the defendant of inside information concerning the issuer.
It is at once apparent that in Kern the “unorthodox” transaction was a closing disposition transaction. It was a merger which was asserted to be a “sale.” The instant case is the converse. Here, the unorthodox transaction was an opening acquisition transaction, i. e., the merger of Atlantic into Susquehanna, which is asserted to be a “purchase.” It was followed by sales of stock within six months thereafter by four individuals having various connections with Atlantic and Susquehanna.
Drawing upon Kern — erroneously, as I shall try to demonstrate — the majority, for all practical purposes, limits its inquiry into the possibility that the four individuals may have had access to inside information which would have permitted them to realize short-swing profits to the events and capacities of these individuals prior to the effective date of the merger. It deems the possibility of speculative abuse after the merger irrelevant, and this is where the majority and I disagree. Of course, in Kern, such a limitation was proper because the merger was a closing disposition of the plaintiff-issuer’s stock; the defendant ceased to be a statutory insider when the merger was consummated. But, in the instant case the merger was an opening acquisition. The individual defendants could not become statutory insiders until the merger was effective;' and it would seem to me that access to inside information and the possibility of speculative abuse within the six months period thereafter would be highly relevant, if not, indeed, crucial. Nothing in the language of the court’s opinion in Kern requires the limitation adopted by the majority in the present case. The imposition of such a limitation, in my view, proscribes activities that § 16(b) was not intended to reach and leave unattended an evil that is clearly the target of the policy underlying § 16(b).
Section 16(b) was designed to prevent certain classes of persons thought likely to have “inside” information concerning an issuer, i. e., directors and officers of such issuer (if they were officers and directors at the time of either acquisition or sale of securities), or beneficial owners of ten percent of any class of equity security of such issuer (if they were such beneficial owners at both the time of sale and purchase of any equity security), from executing transactions in the securities of such issuer based on inside information. The purpose was sought to be achieved by holding any person who is a statutory “insider” of the issuer accountable to the issuer for profits made by sales and purchases, or *355purchases and sales, of securities of the issuer, separated by less than six months without proof of actual use of inside information. It is manifest that where the alleged sale or purchase is an “unorthodox” transaction, application of the possibility of speculative abuse of inside information test must be guided by the specific evil the statute seeks to prevent: injury to outsider shareholders of the issuer, caused by persons trading in the securities of the issuer who make use of information concerning the issuer, obtained by virtue of their status as insiders with respect to the issuer.
A finding that the four defendants may have had access to and an opportunity to use information concerning the merger during the period prior to consummation of the merger would provide no basis for applying § 16(b) in a suit brought by a Susquehanna stockholder. Any information regarding Susquehanna that they obtained during this period could not have come to them by virtue of any status as a statutory insider of Susquehanna. Therefore, other things being equal, § 16(b) should not be applied, since it is not the policy of that provision to prevent persons who are not statutory insiders of the issuer from making speculative abuse of any inside information obtained through some other relationship to the issuer.
Furthermore, it would not appear that the shareholders of Susquehanna — intended beneficiaries of § 16(b)’s protection in a suit predicated on a purchase and sale, or a sale and purchase, of Susquehanna stock—could be injured by the defendants’ speculating upon inside information concerning the merger during the pre-merger period. The speculative value of any information concerning Susquehanna that may have become available to defendants during this period inhered in its power to indicate, either directly or indirectly, whether the exchange rate of Susquehanna stock for Atlantic stock was more favorable to Susquehanna or Atlantic shareholders.1 If the terms were more favorable to Susquehanna shareholders, defendants could profit from this information by liquidating their Atlantic holdings before the merger. If the terms were more favorable to Atlantic stockholders, they could profit, by either retaining or increasing, or both retaining and increasing their Atlantic holdings, prior to the merger. But, in either event, Atlantic’s stockholders, not Susquehanna’s stockholders, would be injured by the use of this inside information. Thus, the majority’s concern for defendants’ inside information prior to consummation of the merger would appear to be implicitly based upon an extension of the protection of § 16(b) beyond that envisioned by Congress.2
While the majority cites no authority for the proposition that the consummation of an “unorthodox” opening acquisition is the cutoff point for determining whether such a transaction can lend itself to the abuse sought to be prevented *356by the statute, there is some authority that suggests the contrary. In Blau v. Lamb, 363 F.2d 507 (2 Cir. 1966), corporation A acquired from corporation B stock in corporation X in exchange for the surrender of shares in B held by A. Virtually all of the stock of both corporations A and B was owned by Lamb. A shareholder of X sued A under § 16(b), because A had disposed of its stock in X within six months of its acquisition from B. Applying the “possibility. of speculative abuse of inside information” test to determine whether the transaction whereby A acquired the X stock from B was a “purchase” within the meaning of § 16(b), the court held the transaction not to be a “purchase” because, in view of Lamb’s ownership of both the acquiring and the disposing corporation, “[t]he transfer in no way increased Lamb’s power to make use of inside information.” 363 F.2d at 526. Clearly, the court looked to the post-transaction situation to determine whether the opening acquisition could serve as a vehicle for the evil which Congress sought to prevent. The majority’s approach in this case is unquestionably inconsistent with Blau v. Lamb.
If, contrary to the majority’s approach, the situation that obtains after an opening merger acquisition is examined, the possibility of abuses that are within the ambit of § 16(b)’s protective purpose may very well appear. When a defendant becomes an insider of an issuer as part of an opening acquisition of such issuer’s stock, such defendant may be able to use information obtained thereafter, by virtue of his insider position, in timing his closing dispositions of the stock. Such an abuse is exactly the sort of evil that § 16(b) is designed to prevent. By the terms of § 16(b), a person who purchases stock of an issuer while not a director, and who later becomes a director of the issuer and sells such stock within six months of purchase, is liable under § 16(b). The statute has been so applied. Adler v. Klawans, 267 F.2d 840 (2 Cir. 1959); Bershad v. Mc-Donough, 428 F.2d 693 (7 Cir. 1970) (alternative holding); Marquette Cement Manufacturing Co. v. Andreas, 239 F. Supp. 962, 966 (S.D.N.Y.1965); Blau v. Allen, 163 F.Supp. 702 (S.D.N.Y.1958). The statute has also been applied when one was a director when he purchased stock, but sold it after his resignation. Feder v. Martin Marietta Corp., 406 F.2d 260 (2 Cir. 1969), cert, den., 396 U.S. 1036, 90 S.Ct. 678, 24 L.Ed.2d 681 (1970). The application of § 16(b) to such cases can be supported only on the theory that the possible use of inside information, acquired during the period between the defendant’s service as a director and his subsequent closing sales, in order to time those sales as advantageously as possible, was one of the kinds of abuses Congress sought to prevent. If defendants became statutory insiders of Susquehanna as part of the merger transaction, the same possibility of speculative abuse would exist with respect to them, and § 16(b) should be applicable.
I therefore conclude that the relevant inquiry, in terms of the purposes of § 16(b) and under Kern, is whether the acquisition has put the defendants in a position to obtain and use inside information in planning a disposition of Susquehanna stock during all or part of the six months’ period following the acquisition. I proceed then to consider how this general principle should be applied to each of the individual defendants.
II.
A. Arch Scurlock. Scurlock, prior to December 1, 1967,' was a director and substantial shareholder of Atlantic, although, as the majority develops, he was thoroughly immunized from access to inside information. He had no control over the merger negotiations, and he had no access to information concerning the impending merger transaction. Were the possibility of speculative abuse test to be applied solely to events prior to the effective date of the merger, I would not quarrel too strenuously with the majority that Scurlock should not be *357held accountable for short-swing profits under § 16(b).
On August 2, 1967, Seurlock cast the deciding vote in favor of a resolution of the Board of Directors of ARC submitting the proposed merger with Susquehanna to the shareholders for approval.3 By the terms of the agreement of merger, he became a director of Susquehanna on December 1, 1967. On December 4th, the effective date of the merger, Scur-lock exchanged his Atlantic stock for Susquehanna stock, and within six months, while still a director of Susquehanna, he made cash sales on the open market from his holdings of Susquehanna. Seurlock thus became a statutory insider — a director of Susquehanna — as part of the transaction whose characterization as a “purchase” vel non is at issue. I now turn to consider whether that transaction placed him in a position to make use of inside information about Susquehanna in planning his subsequent sales.
Although the majority characterizes Seurlock as an “outside” shareholder of Susquehanna who did not take any active role in managing Susquehanna and did not enjoy the confidence of its chief executive, it was stipulated that Scur-lock did discharge his duties as director of that company. Section 16(b) presumes that a director has access to inside information that could be of speculative value. The statute draws no distinction between “active” and “passive” directors and, in the absence of evidence that a director did not in fact discharge the duties normally associated with that position, a conclusion that a director was not privy to inside information would seem to be at odds with the congressional intent.
The majority stresses also that the proxy statement, prepared in connection with the merger and made available to all stockholders of Atlantic and Susquehanna, fully disclosed the material facts concerning Susquehanna. There was thus, so the argument runs, no “inside” information possessed by Seurlock since all stockholders knew everything that it was important to know about Susquehanna. But these statements are true only with respect to “inside” information before the effective date of the merger. The record does not establish that Seurlock lacked access, by virtue of his position as a director after the merger, to information about Susquehanna that would have been useful to him in timing his subsequent sales of Susquehanna stock. Because Seurlock is presumed to have had access to such information after the merger and because I think that the proper application of the possibility of abuse test requires us, when the merger is the opening acquisition transaction, to determine whether such transaction placed the defendant in a position to abuse such information during the period six months after the merger, I would hold Seurlock liable under § 16(b).
Seurlock contends that he had no opportunity for speculative abuse of inside information during the post-merger period because his subsequent cash sales were made as part of a distribution of the Susquehanna stock registered under the Securities Act of 1933. He argues that, as a director and signatory of the registration statement, he had a continuing duty to disclose any material inside information, the omission of which would render the statement misleading. According to Seurlock, the presence of potential liability under the Securities Act, upon proof of failure to disclose inside information, eliminates the possibility of speculative abuse of inside information during the post-merger period. I deem' this argument without merit. *358Section 16(b) was designed as a prophylactic rule that would permit recovery without proof of actual abuse of inside information, since such proof would be difficult to obtain. This policy would be frustrated if the presence of a potential cause of action under a provision of the Securities Act requiring proof of actual abuse for recovery is permitted to supplant § 16(b). I would not read the remedies as being alternative, but rather would read them as cumulative. I would affirm as to Scurlock with respect to his net profits. The judgment against him might be modified, however, with regard to the allowance of interest.
B. Keith Rumbel. Rumbel was a senior vice-president and stockholder of Atlantic prior to its merger into Susquehanna. Pursuant to the merger, Rumbel acquired Susquehanna stock in exchange for Atlantic stock. At the time of the merger, the Board of Directors of Susquehanna elected him “Senior Vice-President” of the “Atlantic Research Group,” a division of Susquehanna pursuant to the terms of the merger agreement. Rumbel held this position when he sold certain of his shares of Susquehanna stock within six months of their acquisition.
The district court held Rumbel not liable under § 16(b) because he was not a statutory insider. The holding was based on the district court’s finding that Rumbel’s duties as an “officer,” both of Atlantic and Susquehanna, were mere staff functions and routine administrative chores, and not such as to give him access to inside information. Gold v. Scurlock, 324 F.Supp. 1211, 1215 (E.D. Va.1971).
An examination of the record shows that the district court’s findings were not clearly erroneous, and I would affirm on the ground that Rumbel was not an “officer” of Susquehanna within the meaning of § 16(b) as that term is defined in S.E.C. Rule X-3b-2.
The rule defines “officer” as a president, vice-president, treasurer, secretary, comptroller, and any other person who performs for an issuer, whether incorporated or unincorporated, functions corresponding to those performed by the foregoing officers. 17 C.F.R. § 240.3b-2.
The rule has been held to be a valid exercise of the S.E.C.’s power under § 3(b), 15 U.S.C.A. § 78c(b) (1971), to define “technical, trade, and accounting terms.” Lockheed Aircraft Corp. v. Rathman, 106 F.Supp. 810 (S.D.Cal. 1952) ; Lockheed Aircraft Corp. v. Campbell, 110 F.Supp. 282 (S.D.Cal. 1953) .
I do not find persuasive plaintiff’s argument that when the district court made an ultimate finding that Rumbel was one of three officers of Susquehanna (324 F.Supp. at 1215), it was established without further inquiry that Rumbel was an “officer” as defined by Rule X-3b-2. There is a semantic difference between “vice-president of the issuer,” the obvious reading of the rule, and “vice-president of a division of the issuer.” That this difference may be important is suggested by the rule that an officer of a subsidiary of the issuer is not an officer of the issuer, unless it is proven that he actually performs the function of an officer for the parent. Lee Nat’l. Corp. v. Segur, 281 F.Supp. 851 (E.D.Pa.1968). I do not think it sound to include, within the categories of “officers” specifically enumerated in Rule X-3b-2, a person beyond the literal scope of those categories. The general residual category set forth in the rule is obviously designed to govern whether persons, not within the literal scope of the specifically enumerated categories, should, nonetheless, be treated as officers. It follows, I think, that Rumbel was not an officer within the meaning of the rule and, hence, was not an officer for purposes of § 16(b). He was correctly exonerated from liability under § 16(b).
C. Glenn L. Sloane. Sloane was a vice-president and stockholder of Atlantic prior to its merger with Susquehanna. On December 1, 1967, he, like Rum-bel, was elected a “vice-president” of the *359“Atlantic Research Group,” another division of Susquehanna pursuant to the terms of the merger agreement. His duties consisted of serving as manager of R & G Sloane, a subsidiary of Susquehanna. Pursuant to the merger which became effective December 4, 1967, Sloane exchanged his stock in Atlantic for stock in Susquehanna. On April 26, 1968, he was elected a vice-president of Susquehanna, and' on May 8, 1968, he sold 500 shares of Susquehanna’s preferred stock.
The district court held that Sloane was liable for the profits derived from these sales after finding that he was a corporate officer, both in name and in fact, of Atlantic before the merger, and Susquehanna thereafter. The majority reverses on the ground that the record contains no evidence to indicate that Sloane had any access to inside information concerning the merger during the pre-merger period, and as a result there was no chance that the transaction could serve as a vehicle for speculative abuse of inside information by Sloane. For the reasons which I have previously stated, I do not believe that Sloane’s participation in the events that transpired and his access to inside information during the pre-merger period is determinative. Rather, I would look to the first six months of the post-merger period.
The district court made no findings with respect to Sloane’s access to inside information by virtue of his position as a vice-president of the “Atlantic Research Group.” Unquestionably, he obtained such position as part of the merger transaction, but it may well be that, like Rumbel, he was not an officer of Susquehanna as defined by Rule X-3b-2. During the six months post-merger period, he was elected a vice-president of Susquehanna. He undoubtedly became an “officer” of Susquehanna then, but I do not think that this alone would warrant applying § 16(b) to him, because there appears to be no connection, temporal or factual, between the merger transaction and his becoming an officer. Kern; Blau v. Lamb, 363 F.2d 525-526.
As to Sloane, I would therefore remand to the district court for further exploration of whether, prior to April 26, 1967 — the date of his election as an officer of Susquehanna — Sloane performed any functions for Susquehanna corresponding to those of any of the categories of officers enumerated in Rule X-3b-2. If the district court finds that he did, judgment should go against him; but if he did not, he should be exonerated.
D. Arthur W. Sloan. Sloan was a director, chief executive officer and major stockholder of Atlantic prior to its merger into Susquehanna, and he was privy to inside information concerning the merger during the pre-merger period and exercised substantial control over the merger negotiations. As a result of the merger, Sloan acquired by exchange a block of Susquehanna stock; and he became chief executive officer of Susquehanna as expressly provided in the merger agreement. Within six months thereafter he made certain cash sales of his Susquehanna stock.
Because Sloan was not a statutory insider of Susquehanna during the pre-merger period, I would not rest my af-firmance on the possibility of speculative abuse flowing from his actual knowledge during that period. But because Sloan, in accordance with the merger agreement, became the chief executive officer of Susquehanna when the merger was consummated, and continued to hold that position at the time of his sales of stock, he obviously had access to inside information that could have been used in timing his sales of Susquehanna stock. I therefore would conclude that his acquisition of Susquehanna stock as a result of the merger was a “purchase” within the meaning of § 16(b), and since he sold stock within six months thereafter while he was chief executive officer of Susquehanna, he, too, is literally covered by § 16(b) and his profits from the sales must be deemed to have inured to the benefit of Susquehanna.
*360The judgment against him should be affirmed subject only to possible modification for interest.
III.
In entering judgments against the defendants (except Rumbel for the benefit of Susquehanna, the district court directed that accrued interest at six percent per annum be added to defendants’ net profits. The district court made no finding concerning the fairness of an interest award where a defendant was held liable for short-swing profits; rather, the interest was directed to be included as a matter of course. Blau v. Lehman, 368 U.S. 403, 414, 82 S.Ct. 451, 7 L.Ed.2d 403 (1962), holds that interest awards are within the trial court’s discretion, and interest should be awarded in response to considerations of fairness. As the majority points out, district courts do not ordinarily award interest where “good faith” is shown to have existed on the part of any defendant.
I agree that the district court’s failure to make any finding with regard to interest requires that that part of its judgments be vacated. Silence cannot be an indication of the exercise of sound discretion. The majority, however, with regard to Sloan, holds that he did not willfully violate § 16(b), and that it would be inequitable to allow interest on his short-swing profits in computing the judgment entered against him. My view is that the district court should be afforded the opportunity in the. first instance to exercise its discretion as to whether interest should be included, and the majority’s direction with reference to Sloan is a usurpation of the district court’s discretion. The proceedings have been long, but the district court can certainly exercise its discretion on the basis of the present record without undue delay. I would, therefore, remand the question of interest with respect to Sloan, Sloane (as to whom I would also recommend the question of liability), and Scurlock to the district court for the exercise of its discretion in the first instance.
. Information, not generally available, contained on informal income statements and balance sheets of Susquehanna might directly indicate that the proposed market value of $36.00 per share of the Susquehanna stock to be issued in exchange for Atlantic stock was too high or too low. Information concerning probable future developments, either good or bad, in Susquehanna’s post-merger business operations might indirectly indicate that the proposed market value of $36.00 was too high or too low.
. Of course, defendants might wait until after their merger acquisition of Susquehanna stock to act on their knowledge that such stock was either overvalued or undervalued. Such a course of action would be likely only if the defendants could be confident that the restricted nature of such information would survive the merger transaction. It is recognized that such post-merger dealing in the issuer’s stock would injure the issuer’s shareholders. However, it cannot be gainsaid that the majority’s approach includes acts injurious to the shareholders of Atlantic among the possibilities of abuse that trigger the application of the statute. Furthermore, it should be reemphasized that in the contingency discussed above, defendants would not have put to speculative advantage information which they gained as statutory insiders of Susquehanna and, hence, § 16(b) should not be deemed applicáble.
. It is worth noting this difference from one of the factors that led to a determination in favor of the defendant in Kern — the volun-tariness of the transaction at issue. As it turns out, Seurlock could have vetoed the transaction. The corporate defendant in Kern did not enjoy a similar position; its inability to control the transaction at issue was one of the considerations that led the Court to reject a senselessly harsh application of § 16(b).