On June 4th, the Court of Appeals for the Second Circuit addressed the previously acquired debt and the borderline exceptions to the application of strict liability requirement under Section 16(b) of the 1934 Act that statutory insiders disgorge short-swing profits. The court held that the statutory insider's renewed note was not a previously acquired debt because at the time of the renewal, the debt was not due and owing since the insider failed to demand accelerated payment when the issuer defaulted. Nor was the transaction borderline; both an involuntary transaction and lack of insider knowledge are necessary for the application of that exception. And the changes made when the note was renewed made it a newly issued security. The court closed with a discussion of how to calculate short-swing profits for a hybrid note which allows for conversion at both a fixed and floating strike price. Analytical Surveys, Inc. v. Tonga Partners, L.P.