The U.S. District Court for the Southern District of New York dismissed a claim brought under Section 16(b) of the Securities and Exchange Act of 1934, finding that the sale and purchase within six months of two different series of common stock traded under different ticker symbols and not otherwise convertible into one another or derivatives of one another did not constitute the “purchase and sale, or any sale and purchase, of any equity security” under Section 16(b) of the Exchange Act.

Plaintiff Michael Gibbons brought suit under Section 16(b) of the Exchange Act against John Malone and Discovery Communications, Inc. alleging that Malone, a former director of Discovery, engaged in insider trading by selling shares of Discovery’s Series C Common Stock and separately purchasing shares of Discovery’s Series A Common Stock during a two week period in December 2008. The plaintiff alleged that “for each share of Series A Stock purchased by Malone, a corresponding sale of Series C Stock was made at a higher price by Malone.” Gibbons sought disgorgement of Malone’s short swing profit.

The defendants, in their motion to dismiss for failure to state a claim upon which relief could be granted, argued that transactions in different series of stock were not subject to disgorgement of profits under Section 16(b). The court ultimately agreed and dismissed the claim.