In 2019, the U.S. District Court for the Eastern District of New York (District Court) granted summary judgment in a shareholder derivative suit, directing a hedge fund to disgorge nearly $5 million of short-swing profits for violating Section 16(b) of the Securities Exchange Act of 1934 in connection with its trading in the shares of an issuer. The issue on appeal was whether the fund – which had delegated voting and trading authority to its investment adviser – was a beneficial owner of the company. The U.S. Court of Appeals for the Second Circuit (Court) ruled that there were issues of fact as to whether the fund was a beneficial owner, vacated the District Court’s judgment and remanded the case for further proceedings. This article analyzes the Court’s decision. See “Delegation of Investment and Voting Authority to a Fund’s Investment Adviser Does Not Shield the Fund From Liability for Short‑Swing Trading Profits” (Oct. 10, 2019).