Full opinion text
JON 0. NEWMAN, Circuit Judge: This case comes to us raising issues concerning a contractual arrangement known as a “cash-settled total return equity swap agreement” although our disposition at this stage of the appeal touches only tangentially on such issues. The Children’s Investment Fund Management (“TCI”) and 3G Capital Partners (“3G”) are hedge funds that entered into cash-settled total-return equity swap agreements referencing shares of CSX Corporation (“CSX”). They later sought to elect a minority slate of candidates to CSX’s board of directors. Alleging that TCI and 3G (“the Funds”) had failed to comply in a timely fashion with the disclosure requirements of section 13(d) of the Williams Act, 15 U.S.C. § 78m(d), CSX brought the present action. It sought injunctions barring the Funds from any future violations of section 13(d) and preventing the Funds from voting CSX shares at the 2008 CSX annual shareholders’ meeting. The District Court held that the Funds had violated section 13(d) and granted a permanent injunction against further such violations with respect to shares of any company. See CSX Corp. v. Children’s Investment Fund Management (UK) LLP, 562 F.Supp.2d 511, 552, 554-55, 573-74 (S.D.N.Y.2008) (“CSX /”). However, the Court declined to enjoin the Funds from voting their CSX shares. See id. at 568-72. CSX appealed the denial of the voting injunction; the Funds cross-appealed the granting of the permanent injunction. On September 15, 2008, we affirmed the District Court’s denial of the voting injunction. CSX Corp. v. Children’s Investment Fund Management (UK) LLP, 292 Fed.Appx. 133, 133-34 (2d Cir.2008) (“CSX II ”). In this opinion, we consider some of the issues raised by the Funds’ cross-appeal and explain the reasons for our earlier order in CSX’s appeal. The parties have endeavored to frame issues that would require decision as to the circumstances under which parties to cash-settled total-return equity swap agreements must comply with the disclosure provisions of section 13(d). Such issues would turn on the circumstances under which the long party to such swap agreements may have or be deemed to have beneficial ownership of shares purchased by the short party as a hedge. Rather than resolve such issues, as to which there is disagreement within the panel, we consider at this time only issues concerning a “group” violation of section 13(d)(3) with respect to CSX shares owned outright by the Defendants (without regard to whatever beneficial ownership, if any, they might have acquired as long parties to cash-settled total-return equity swap agreements). Because we lack sufficient findings to permit appellate review of such issues, we remand for further findings. Background We describe here only the salient facts and District Court proceedings, leaving many details to the Discussion section. TCI and 3G (“the Funds”) are investment funds that in 2006 came to believe that CSX, a large railroad company, had unrealized value that a change in corporate policy and perhaps management might unlock. The Funds purchased shares in CSX and entered into cash-settled total-return equity swaps referencing CSX stock. The Funds then engaged in a proxy fight with the management of CSX. (a) Cash-settled total-return equity swaps. Total-return swaps are contracts in which parties agree to exchange sums equivalent to the income streams produced by specified assets. Total-return equity swaps involve an exchange of the income stream from: (1) a specified number of shares in a designated company’s stock, and (2) a specified interest rate on a specified principal amount. The party that receives the stock-based return is styled the “long” party. The party that receives the interest-based return is styled the “short” party. These contracts do not transfer title to the underlying assets or require that either party actually own them. Rather, in a total-return equity swap, the long party periodically pays the short party a sum calculated by applying an agreed-upon interest rate to an agreed-upon notional amount of principal, as if the long party had borrowed that amount of money from the short party. Meanwhile, the short party periodically pays the long party a sum equivalent to the return to a shareholder in a specified company — the increased value of the shares, if any, plus income from the shares — as if the long party owned actual shares in that company. As a result, the financial return to a long party in a total-return equity swap is roughly equivalent to the return when borrowed capital is used to purchase shares in the referenced company. Long swap positions can, therefore, be attractive to parties that seek to increase the leverage of their holdings without actually buying the shares. The short party’s financial return, in turn, is equivalent to the return to someone who sold short and then lent out the proceeds from that sale. However, because of the inherent risks in short-equity positions — share value can be more volatile than interest rates — persons holding short positions in total-return equity swaps will usually choose to purchase equivalent numbers of shares to hedge their short exposure. Total-return equity swaps may be “settled-in-kind” or “cash-settled.” When an equity swap that is settled-in-kind terminates, the long party receives the referenced security itself, in exchange for a payment equal to the security’s market price at the end of the previous payment period. When a cash-settled equity swap terminates, the short party pays the long party the sum of the referenced equity security’s appreciation in market value and other net cash flows (such as dividend payments) that have occurred since the most recent periodic payment. If this sum is negative, then the short party receives the corresponding amount from the long party. Unlike swaps settled in kind, cash-settled swaps do not give the long party a right to acquire ownership of the referenced assets from the short party. In all other respects, settled-in-kind and cash-settled equity swaps are economically equivalent. (b) The transactions in the present case. The swaps purchased by the Funds were cash-settled total-return equity swaps referencing shares of CSX. The Funds were the long parties, and several banks were the short parties. Although the swap contracts did not require the short parties— the banks — actually to own any CSX shares, the Funds understood that the banks most likely would hedge their short swap positions by purchasing CSX shares in amounts matching the number of shares referenced in the swaps, and the banks generally did so. The Funds’ trading in CSX shares and CSX-referenced swaps followed no consistent pattern. During some periods the Funds increased their holdings; during other periods they decreased them. Almost immediately after making its initial investment in CSX, TCI approached the company to negotiate “changes in policy and, if need be, management [that] could bring better performance and thus a higher stock price,” CSX I, 562 F.Supp.2d at 523, which would allow TCI to profit from its swap holdings. TCI later explored the possibility of a leveraged buyout (“LBO”) of CSX, and informed other hedge funds of its interest in “altering CSX’s practices in a manner that TCI believed would cause its stock to rise.” Id. at 526. When it became clear that CSX had little interest in TCI’s proposed policy changes or LBO proposals, TCI began preparations for a proxy contest to effectuate its desired policy and management changes at CSX. There is no doubt that the Funds wanted to avoid disclosure under the Williams Act until a time they believed suitable. Thus, TCI took care to disperse its swaps among multiple counterparties so that no one particular counterparty would trigger disclosure under the Williams Act by purchasing as a hedge more than 5 percent of a class of CSX securities. TCI could not be certain how counterparties would vote their hedge shares but of course could vote the shares that it owned. When a proxy-fight seemed likely, TCI decreased its swap holdings and purchased more CSX shares. Meanwhile, the Funds engaged in various communications among themselves, with CSX’s management, and with some of the banks. As early as November 2006, TCI had contacted CSX and two banks— one in December 2006, and the other in January 2007 — about the possibility of a leveraged buyout. TCI also had communications with both Austin Friars, a hedge fund owned by Deutsche Bank, and with Deutsche Bank itself about CSX. TCI and 3G communicated between themselves at various times in 2007, but not until December 19, 2007, did they file a Schedule 13D with the SEC disclosing that they had formed a “group” by “enter[ing] into an agreement to coordinate certain of their efforts with regard [sic ] (I) the purchase and sale of [various shares and instruments] and (ii) the proposal of certain actions and/or transactions to [CSX].” CSX I, 562 F.Supp.2d at 535. On January 8, 2008, the TCI-3G group proposed a minority slate of directors for the CSX board. See id. at 536. The vote on this proposal occurred at the June 25, 2008, CSX shareholders’ meeting. (c) The present action. On March 17, 2008, CSX brought the present action against TCI and 3G in the Southern District of New York alleging, among other things, violation of the Williams Act, Pub.L. No. 90-439, 82 Stat. 454 (1968) (codified as amended at 15 U.S.C. §§ 78m(d)-(g), 78n(d),(f) (1988)), and various rules and regulations promulgated thereunder. The Williams Act added section 13(d) to the Securities Exchange Act of 1934 to require that, among other things, various disclosures be filed with the Securities and Exchange Commission (“SEC”) when a “person” has acquired “beneficial ownership” of more than 5 percent of an exchange-traded class of a company’s shares. 15 U.S.C. § 78m(d)(l). Included in the statute’s definition of a “person” is a “group [acting] for the purpose of acquiring, holding, or disposing of securities of an issuer.” 15 U.S.C. § 78m(d)(3). The District Court held that, for purposes of section 13(d), TCI was deemed a beneficial owner of all CSX shares held by banks as hedges against TCI’s CSX-referenced swaps, and thus that TCI violated section 13(d) by failing to make timely filings once TCI’s combined holdings of CSX shares and CSX-referenced swaps crossed the 5 percent ownership threshold. See CSX Corp. I, 562 F.Supp.2d at 552. In making this ruling, the District Court considered whether TCI had beneficial ownership of the hedged shares pursuant to both SEC Rule 13d-3(a), which defines a beneficial owner, and SEC Rule 13d-3(b), which identifies circumstances under which a person shall be deemed to be a beneficial owner. See 17 C.F.R. § 240.13d-3 (a), (b). Ultimately, the District Court did not rule on whether TCI was a beneficial owner under Rule 13d-3(a), see CSX I, 562 F.Supp.2d at 548, but did rule that TCI was deemed a beneficial owner under Rule 13d — 3(b) because it had “created and used the [swaps] with the purpose and effect of preventing the vesting of beneficial ownership in TCI as part of a plan or scheme to evade the reporting requirements of Section 13(d),” id. at 552. The District Court also found that TCI and 3G violated section 13(d) by failing to make timely disclosure of having formed a “group” “with respect to CSX securities ... no later than February 13, 2007.” Id. at 555. The Court granted CSX a permanent injunction against TCI and 3G, prohibiting any further violations of section 13(d), whether or not involving CSX shares. Id. at 573-74. The Court concluded that it was foreclosed as a matter of law from granting an injunction prohibiting the Funds from voting the 6.4 percent of CSX shares that they had acquired after forming a group. Id. at 568-72. CSX appealed this denial of an injunction against voting the disputed shares. The Funds cross-appealed the District Court’s finding that the Funds had violated section 13(d) and the grant of a permanent injunction against any future violations of section 13(d). On September 15, 2008, we entered an order affirming on CSX’s appeal, but deferred until now our discussion of the reasons for that order. See CSX II, 292 Fed.Appx. at 133-34. Discussion We leave discussion of the merits of the now-resolved CSX appeal, i.e., the issue of whether prohibiting the Funds from voting the CSX shares was an appropriate remedy for the alleged violation, to the end of this opinion, and turn to the Funds’ cross-appeal. As to that appeal, the panel is divided on numerous issues concerning whether and under what circumstances the long party to a cash-settled total return equity swap may be deemed, for purposes of section 13(d), the beneficial owner of shares purchased by the short party as a hedge. In view of that disagreement, we conclude that it is appropriate at this time to limit our consideration to the issue of group formation, see 15 U.S.C. § 78m(d)(3), an issue as to which we seek further findings from the District Court. All members of the panel are in agreement as to this disposition. I. Statutory and Regulatory Framework Section 13(d) provides in pertinent part: (1) Any person who, after acquiring directly or indirectly the beneficial ownership of any equity security of a class which is registered pursuant to section 781 of this title ..., is directly or indirectly the beneficial owner of more than 5 per centum of such class shall, within ten days after such acquisition, [disclose to the issuer, the SEC, and the exchanges] a statement containing such of the following information, and such additional information, as the Commission may by rules and regulations, prescribe as necessary or appropriate in the public interest or for the protection of investors .... (3) When two or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, or disposing of securities of an issuer, such syndicate or group shall be deemed a “person” for the purposes of this subsection. 15 U.S.C. § 78m(d)(l), (3). SEC Rule 13d — 5(b)(1) provides that the section 13(d) disclosure requirements apply to the aggregate holdings of any “group” formed “for the purpose of acquiring, holding, voting or disposing” of equity securities of an issuer. 17 C.F.R. § 240.13d-5(b)(l). This Rule tracks Section 13(d)(3) in all respects except that the Rule adds voting as a group for the purpose of triggering the disclosure provisions. Compare id. with 15 U.S.C. § 78m(d)(3). “‘[T]he touchstone of a group within the meaning of section 13(d) is that the members combined in furtherance of a common objective.’ ” Roth v. Jennings, 489 F.3d 499, 508 (2d Cir.2007) (quoting Wellman v. Dickinson, 682 F.2d 355, 363 (2d Cir.1982)). II. “Group” Violation There are three kinds of groups that might be found in the present matter. One might consist of one or more long parties (the Funds) and one or more short counterparties that have hedged with shares (the banks). The second might consist of the Funds, i.e., TCI and 3G. The third might consist of banks that have purchased shares as a hedge. Only the possibility of a group comprising TCI and 3G is at issue on this appeal. As we have noted, the statute and the implementing rule are both concerned with groups formed for the purpose of acquiring shares of an issuer. See 15 U.S.C. § 78m(d)(3); 17 C.F.R. § 240.13d-5(b)(l). The District Court recognized that whether a group exists under section 13(d)(3) “turns on ‘whether there is sufficient direct or circumstantial evidence to support the inference of a formal or informal understanding between [members] for the purpose of acquiring, holding, or disposing of securities’ ” CSX I, 562 F.Supp.2d at 552 (quoting Hailwood Realty Partners, L.P. v. Gotham Partners, L.P., 286 F.3d 613, 617 (2d Cir.2002)) (emphasis added). Endeavoring to meet the statutory standard, the District Court found that TCI and 3G formed a group, within the meaning of section 13(d)(3), “with respect to CSX securities,” and that this group was formed no later than February 13, 2007. See id. at 555. Then, after identifying the Defendants’ “activities and motives throughout the relevant period,” id. at 553, the Court stated, “These circumstances ... all suggest that the parties’ activities from at least as early as February 13, 2007, were products of concerted action .... ” Id. at 554 (emphasis added). These findings are insufficient for proper appellate review. Although the District Court found the existence of a group “with respect to CSX securities,” the Court did not explicitly find a group formed for the purpose of acquiring CSX securities. Even if many of the parties’ “activities” were the result of group action, two or more entities do not become a group within the meaning of section 13(d)(3) unless they “act as a ... group for the purpose of acquiring ... securities of an issuer.” 15 U.S.C. § 78m(d)(3). Moreover, because the District Court deemed the Funds, as long parties to cash-settled total-return equity swap agreements, to have a beneficial interest in shares acquired by hedging short parties to such agreements, the Court did not distinguish in its group finding between CSX shares deemed to be beneficially owned by the Funds and those owned outright by the Funds. However, with our current consideration of a group violation confined to CSX shares owned outright by the Funds, a precise finding, adequately supported by specific evidence, of whether a group existed for purposes of acquiring CSX shares outright during the relevant period needs to be made in order to facilitate appellate review, and we will remand for that purpose. Because the combined total outright ownership of CSX shares by TCI and 3G crossed the 5 percent threshold by April 10, 2007, a TCI/3G group, if it was formed for the statutorily defined purpose, would have been required to file a section 13(d) disclosure within ten days, ie., by April 20, 2007, see 15 U.S.C. § 78m(d); 17 C.F.R. § 240.13d-l. Thus, on remand the District Court will have to make findings as to whether the Defendants formed a group for the purpose of “acquiring, holding, voting or disposing,” 17 C.F.R. § 240.13d-5(b)(l), of CSX shares owned outright, and, if so, a date by which at the latest such a group was formed. Only if such a group’s outright ownership of CSX shares exceeded the 5 percent threshold prior to the filing of a section 13(d) disclosure can a group violation of section 13(d) be found. III. Appropriateness of Injunctive Relief Because on remand, the District Court might find a section 13(d) group violation with respect to a group acquisition of CSX shares outright and the Defendants, on the cross-appeal, have disputed the propriety of an injunction, even on the basis of the violations as found by the District Court, we will briefly consider some of the considerations relevant to injunctive relief. It is settled in this Circuit that an issuer has an implied right of action to seek injunctive relief for a violation of section 13(d), see GAF Corp. v. Milstein, 453 F.2d 709, 720 (2d Cir.1971), but must satisfy traditional equitable requirements for an injunction, see Rondeau v. Mosinee Paper Corp., 422 U.S. 49, 57, 95 S.Ct. 2069, 45 L.Ed.2d 12 (1975). We have recognized that a prohibition on future securities law violations has “grave consequences” because it subjects a defendant to contempt sanctions and also has “serious collateral effects.” S.E.C. v. Unifund SAL, 910 F.2d 1028, 1040 (2d Cir.1990). The usual basis for prospective injunctive relief is not only irreparable harm, which is required for all injunctions, see Rondeau, 422 U.S. at 57, 95 S.Ct. 2069 (citing Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 506-07, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959)), but also “ ‘some cognizable danger of recurrent violation,’ ” Rondeau, 422 U.S. at 59, 95 S.Ct. 2069 (quoting United States v. W.T. Grant Co., 345 U.S. 629, 633, 73 S.Ct. 894, 97 L.Ed. 1303 (1953)). In this case, the District Court considered both irreparable harm and the probability of future violations. See CSX I, 562 F.Supp.2d at 572-73. Having held that the Funds violated section 13(d), the District Court issued a broad permanent injunction against future violations, an injunction not limited to CSX shares: Defendants, their officers, agents, servants, employees, attorneys, and all persons in active concert or participation with any of the foregoing who receive actual notice of this injunction ... are enjoined and restrained from violating Section 13(d) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(d), and Regulation 13D thereunder.... The District Court predicated this broad injunction on the basis of a section 13(d) violation that took into account not only the shares of CSX that the Funds owned outright but also the much larger quantity of shares purchased as hedges by the short parties to CSX-referenced swaps. Because this opinion considers only the more limited issue of whether the Funds, as a group, committed a violation of section 13(d) with respect to shares that they owned outright, if the District Court on remand finds the existence of a group formed to acquire CSX shares outright during the relevant period, it will have to reconsider the appropriateness of an injunction, and, if one is to be issued, what should be its appropriate scope. If a section 13(d) violation is found, limited to a group violation with respect to purchase of the shares outright (which is the only violation considered in this opinion), the threat of future violations would be less substantial than appeared to the District Court, which based its broad injunction (ie., not limited to CSX shares) on its view that the Funds were deemed to be beneficial owners of the hedged shares purchased by the short parties to the swap agreements. Another factor that would arguably weigh against a broad injunction is the disclosure that CSX made just prior to the expiration of the ten-day period following April 10, 2007, the date when the group’s total of CSX shares owned outright crossed the 5 percent threshold. On April 18, 2007, CSX filed its Form 10-Q for the period ending March 30, 2007. The Form 10-Q reported that TCI had made a filing under the Hart-Scott-Rodino Antitrust Improvements Act, Pub.L. No. 94-435, 90 Stat. 1383 (1976), of its intention to acquire more than $500 million of CSX stock and that TCI “currently holds a significant economic position through common stock ownership and derivative contracts tied to the value of CSX stock.” CSX I, 562 F.Supp.2d at 527 (internal quotation marks omitted). Thus, TCI’s control ambitions were known to the public before it was required to file under section 13(d), at least with respect to the group’s outright ownership of shares as of April 10, 2007. We recognize that a Hart-Scott-Rodino filing does not reveal all of the information required by a section 13(d) disclosure. Nevertheless, the filing has a bearing on the scope of relief warranted for the limited section 13(d) violation we have considered in this opinion. On the other hand, if a section 13(d) violation, even a limited one, is found on the basis of a group purchase of shares outright and non-disclosure when the group’s holdings crossed the 5 percent threshold, it would continue to be relevant that the District Court has found that some of the parties “testified falsely in a number of respects, notably including incredible claims of failed recollection.” CSX I, 562 F.Supp.2d at 573. The District Court was within its discretion in concluding that people who have lied about securities matters can reasonably be expected to attempt securities laws violations in the future. Under all the circumstances, we will remand to the District Court so that it may (a) determine whether the evidence permits findings as to the formation of a group, as described above, a date by which at the latest such a group was formed, and whether such a group’s outright ownership of CSX shares crossed the 5 percent threshold prior to the filing of a section 13(d) disclosure, and (b) if a group violation of section 13(d) is found, reconsider the appropriateness and scope of injunctive relief based only on the group’s failure to disclose outright ownership of more than 5 percent of CSX’s shares. IV. Injunctive “Sterilization” of the Disputed Shares The District Court concluded that it was foreclosed as a matter of law from enjoining the Funds’ voting of CSX shares acquired between the latest date on which their section 13(d) disclosure obligations might have begun and the date on which they actually made those disclosures. See CSX I, 562 F.Supp.2d at 568-72. CSX argues that the Court should have enjoined the voting of those shares on three grounds: (I) courts generally have broad powers to grant injunctive relief; (ii) a “sterilization” injunction was necessary to promote the ends of the Williams Act both by leveling the playing field in the contest for corporate control in order to partially restore the integrity of the shareholder franchise and by deterring future violations of the Act’s disclosure provisions; and (iii) courts have “inherent authority” to sanction litigation misconduct. In Treadway Companies, Inc. v. Care Corp., 638 F.2d 357 (2d Cir.1980), we held that “an injunction will issue for a violation of § 13(d) only on a showing of irreparable harm to the interests which that section seeks to protect.” 638 F.2d at 380. We also said that “[t]he goal of § 13(d) is to alert the marketplace to every large, rapid aggregation or accumulation of securities ... which might represent a potential shift in corporate control.” Id. (internal quotation marks omitted) (second alteration in original); see also Rondeau, 422 U.S. at 58, 95 S.Ct. 2069 (“The purpose of the Williams Act is to insure that public shareholders who are confronted by a cash tender offer for their stock will not be required to respond without adequate information regarding the qualifications and intentions of the offering party.”). Thus, the interests that section 13(d) protects “are fully satisfied when the shareholders receive the information required to be filed.” Treadway, 638 F.2d at 380; see also United States v. O’Hagan, 521 U.S. 642, 668, 117 S.Ct. 2199, 138 L.Ed.2d 724 (1997) (“Congress designed the Williams Act to make disclosure, rather than court imposed principles of ‘fairness’ or ‘artificiality,’ ... the preferred method of market regulation.”) (internal quotation marks and citation omitted) (alteration in original). Consequently, in Treadway, we held that because shareholders had received the required information four months before the proxy contest in that case, “there was no risk of irreparable injury and no basis for injunctive relief.” 638 F.2d at 380. In the present matter, the Funds’ section 13(d) disclosures occurred in December 2007, approximately six months before the June 25, 2008, shareholders’ meeting. Therefore, following Treadway, we conclude that injunctive share “sterilization” was not available. CSX, however, argues that the Williams Act does not aim merely at timely dissemination of information but more broadly “seeks to provide a level playing field and to promote compliance.” Appellant’s Brief at 48. For this proposition, CSX relies on a passing remark, in a footnote, in which the Supreme Court expressed skepticism about “whether ‘deterrence’ of § 14(e) violations is a meaningful goal, except possibly with respect to the most flagrant sort of violations which no reasonable person could consider lawful.” Piper v. Chris-Craft Indus., Inc., 430 U.S. 1, 40 n. 26, 97 S.Ct. 926, 51 L.Ed.2d 124 (1977). Far from supporting CSX’s claim, this remark mentions none of the goals of the Williams Act, concerns section 14(e) rather than section 13(d), and actually casts doubt upon the usefulness of determining remedies with an eye toward promoting compliance. CSX also rests its “level playing field” claim on two Supreme Court cases that include “fair corporate suffrage” as among the original goals of the Securities Exchange Act of 1934: Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083, 1103, 111 S.Ct. 2749, 115 L.Ed.2d 929 (1991), and J.I. Case Co. v. Borak, 377 U.S. 426, 431, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964). However, neither case attributed that goal to the Williams Act, and there is no reason to conclude that adequate timely disclosure of the information covered by the Williams Act would be insufficient to ensure the “fairness” of a subsequent shareholder vote. CSX also argues that the importance of deterring violations of section 13(d) provides a general policy-based reason for prohibiting the Funds from voting the disputed shares. Refusing to “sterilize” the voted shares would, CSX argues, leave the Williams Act toothless. However, a statutory provision is not necessarily rendered toothless for lack of a particular sanction. We also note that the proposed sanction might have injured those shareholders who, fully informed, chose to vote with the insurgents. The inappropriateness of share sterilization in such circumstances leaves open the question of what remedies might be appropriate when disclosure that is timely with respect to a proxy contest is not made, and we do not reach that issue here. CSX quotes Franklin v. Gwinnett County Public Schools, 503 U.S. 60, 112 S.Ct. 1028, 117 L.Ed.2d 208 (1992), to the effect that once a federal right of action exists there is a “traditional presumption” that courts can use “all available remedies” unless Congress clearly has provided otherwise. 503 U.S. at 72, 112 S.Ct. 1028. In a similar vein, CSX argues that because the District Court found that officials of both Funds testified falsely, see CSX I, 562 F.Supp.2d at 573, the Court was permitted to issue an injunction to “sterilize” the Funds’ disputed shares as a way of sanctioning abuses of the judicial process. However, neither the presumption about the general availability of remedies nor the responsibility of federal courts to protect the integrity of their proceedings, see, e.g., In re Martin-Trigona, 737 F.2d 1254, 1261 (2d Cir.1984), supersedes Treadway’s holding: in the case of section 13(d), an injunction prohibiting the voting of shares is inappropriate when the required disclosures were made in sufficient time for shareholders to cast informed votes. See Treadway, 638 F.2d at 380. Whether timely or not, the stated purpose of disclosure — allowing informed action by shareholders, see supra note 5 — was fulfilled. Conclusion The District Court’s denial of an injunction against the voting of shares is again affirmed, the injunction issued to prohibit future violations of 13(d) is vacated, and the case is remanded to the District Court for further proceedings consistent with this opinion. In the event of a subsequent appeal, any party may restore jurisdiction to this Court by notice to the Clerk within 30 days of any order or judgment sought to be appealed, without a new notice of appeal, in which event such appeal will be referred to this panel. See United States v. Jacobson, 15 F.3d 19, 21-22 (2d Cir. 1994). . The District Court described TCI and 3G as follows: Defendants [are] The Children's Investment Fund Management (UK) LLP ...[,] The Children’s Investment Fund Management (Cayman) LTD[,].... [and] The Children’s Investment Master Fund.... These entities are run by defendant Christopher Hohn.... Defendant Snehal Amin is a partner of [The Children’s Investment Fund Management (UK) LLP], These five defendants are referred to collectively as TCI. Defendants [are] 3G Fund L.P. ...[,] 3G Capital Partners L.P..... [and] 3G Capital Partners Ltd..... They are run by defendant Alexandre Behring.... These four defendants are referred to collectively as 3G. CSX Corp. v. Children’s Investment Fund Management (UK) LLP, 562 F.Supp.2d 511, 518 (S.D.N.Y.2008) (“CSXI’’). . There is evidence that at least one bank occasionally bought less than the full number of CSX shares referenced in the swaps to which it was the counterparty. CSX I, 562 F.Supp.2d at 580 (App. 1, Image 9, Morgan Stanley Holdings of CSX Swaps with TCI and CSX Share Hedges, Nov. 9, 2006, to Jan. 24, 2008). . 3G’s economic exposure to CSX stock, i.e., actual shares plus CSX-referenced swaps, never exceeded 5 percent. Thus, 3G was able to use a single swap counterparty, Morgan Stanley, without concern that its counterparty’s hedge share purchases would trigger disclosure under the Williams Act. . Rule 13d-3(a) provides: For purposes of sections 13(d) and 13(g) of the Act a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (1) Voting power which includes the power to vote, or to direct the voting of, such security; and/or, (2) Investment power which includes the power to dispose, or to direct the disposition of, such security. 17 C.F.R. § 240.13d-3(a). . Rule 13d — 3(b) provides: Any person who, directly or indirectly, creates or uses a trust, proxy, power of attorney, pooling arrangement or any other contract, arrangement, or device with the purpose of [szc] effect of divesting such person of beneficial ownership of a security or preventing the vesting of such beneficial ownership as part of a plan or scheme to evade the reporting requirements of section 13(d) or (g) of the Act shall be deemed for purposes of such sections to be the beneficial owner of such security. 17 C.F.R. 240.13d-3(b). . Section 13(d) was part of the 1968 Williams Act's response to the (then) growing use of tender offers to effectuate corporate takeovers, a trend that had “removed a substantial number of corporate control contests from the reach of existing disclosure requirements of the federal securities laws." Piper v. Chris-Craft Indus., Inc., 430 U.S. 1, 22, 97 S.Ct. 926, 51 L.Ed.2d 124 (1977). In explaining its purpose in enacting section 13(d), Congress used the language of investor protection. See H.R.Rep. No. 90-1711, at 2-3, 1968 U.S.C.C.A.N. 2811, 2812 (1968) ("The public shareholder must, therefore, with severely limited information, decide what course of action he should take.... [N]o matter what he does, he does it without adequate information to enable him to decide rationally what is the best possible course of action. This is precisely the kind of dilemma which our Federal securities laws are designed to prevent.”); see also Rondeau v. Mosinee Paper Corp., 422 U.S. 49, 58, 95 S.Ct. 2069, 45 L.Ed.2d 12 (1975) ("The purpose of the Williams Act is to insure that public shareholders who are confronted by a cash tender offer for their stock will not be required to respond without adequate information regarding the qualifications and intentions of the offering party.”). Of course, one effect of the Williams Act’s provisions is to alert not only a firm’s shareholders but also the firm’s incumbent management to potential competitors for control of that firm. See James D. Cox, Robert W. Hillman & Donald C. Langevoort, Securities Regulation: Cases and Materials 969 (5th ed. 2006) ("The ostensible statutory purpose is to notify shareholders of the target company of a potential shift in control____But one other beneficiary of the disclosure is quite clear. If it is not already aware of the bidder's activity, target management will take the early warning and begin defensive efforts in earnest.”) (citation omitted).
WINTER, Circuit Judge, concurring: I concur in the judgment remanding for further findings. The district court’s finding of a February 2007 group formation that required disclosure under Rule 13d — 5(b)(1) cannot be upheld for various reasons discussed infra. Particularly, it was based in part on a flawed analysis of the economic and legal role of cash-settled total-return equity swap agreements. The court viewed the economic role of such swaps as an underhanded means of acquiring or facilitating access to CSX stock that could be used to gain control through a proxy fight or otherwise. In my view, without an agreement between the long and short parties permitting the long party ultimately to acquire the hedge stock or to control the short party’s voting of it, such swaps are not a means of indirectly facilitating a control transaction. Rather, they allow parties such as the Funds to profit from efforts to cause firms to institute new business policies increasing the value of a firm. If management changes the policies and the firm’s value increases, the Funds’ swap agreements will earn them a profit for their efforts. If management does not alter the policies, however, and a proxy fight or other control transaction becomes necessary, the swaps are of little value to parties such as the Funds. Absent an agreement such as that described above, such parties must then, as happened here, unwind the swaps and buy stock at the open market price, thus paying the costs of both the swaps and the stock. The district court’s legal analysis concluded that the one role of such swaps was to avoid the disclosure requirements of Section 13(d) — no doubt true — and therefore violated Rule 13d-3. The legal conclusion, however, was also flawed, leaving unmentioned, inter alia, explicit legislation regarding swaps and Supreme Court decisions discussing statutory triggers involving “beneficial ownership” of a firm’s stock. That legislation and those decisions, as they stood at the time, foreclosed the conclusion reached by the district court. Finally, the recent Dodd-Frank bill and SEC response thereto make it clear that the district court’s analysis is not consistent with present law. Dodd-Frank Wall Street Reform Protection Act, Pub.L. No. 111-203, 124 Stat. 1376 (2010); Beneficial Ownership Reporting Requirements and Security Based Swaps, S.E.C. Release No. 64,087, 17 C.F.R. Part 240, 2011 WL 933460, at *2 (June 8, 2011). I In my view, cash-settled total-return equity swaps do not, without more, render the long party a “beneficial owner” of such shares with a potential disclosure obligation under Section 13(d). However, an agreement or understanding between the long and short parties to such a swap regarding the short party’s purchasing of such shares as a hedge, the short party’s selling of those shares to the long party upon the unwinding of the swap agreements, or the voting of such shares by the short parties renders the long party a “beneficial owner” of shares purchased as a hedge by the short party. My discussion of the basis of this conclusion will begin with an examination of aspects of the underlying statutory scheme and resultant caselaw not discussed by the district court. It will then turn to the application of relevant rules promulgated by the SEC. a) The Statutory Scheme Examination of the statutory scheme is particularly important in this matter, for two reasons. First, critical language used in Section 13(d) is used elsewhere in the 1934 Act, and some harmonization of interpretation is desirable, if not necessary. Second, in 2000 and 2010, Congress amended the 1934 Act with particular reference to security-based swaps in ways relevant to this case. To reiterate, Section 13(d) requires disclosure of a variety of information by single beneficial owners of more than 5 percent of a firm’s equity securities. It also requires similar disclosure by a group of beneficial owners, who own in the aggregate more than 5 percent of a firm’s shares, when a purpose of the group is to acquire, hold, or dispose of such securities. See 15 U.S.C. § 78m(d). Some measure of certainty should be accorded to persons subject to Section 13(d)’s disclosure requirements. Investors benefit little from case by case, prolonged, expensive and repetitive litigation that weighs amorphous standards and circumstantial evidence regarding state of mind with disparate outcomes, particularly when the underlying information quickly loses its relevance because of ever-changing commercial environments. Even where a disclosure requirement seems less than fully comprehensive, knowledge of what need be disclosed and what need not at least leaves the market with some certainty as to the unknown. In the present case, much certainty can be provided simply by following the language of Section 13(d). The language does not impose a general disclosure requirement that is triggered by an intent to obtain control or an equity position of influence within a particular company. Nor does it purport to require, as suggested by the district court, disclosure of all steps that might be part of a control transaction in the eyes of a court. Rather, it specifies precise conduct constituting the disclosure trigger: the acquisition, alone or in coordination with others, of “beneficial ownership” of 5 percent of any “equity security” of a company. 15 U.S.C. § 78m(d)(l). The term “beneficial owner[s] ... of any equity security” was not drawn from thin air in 1968. Id. It was already a familiar term from its use in Section 16, which was part of the original 1934 Act. Section 16 requires the reporting of purchases and sales, and disgorgement of profits from certain of those sales, by a defined group of insiders: directors, officers, and, importantly for my purposes, “beneficial owner[s] of more than 10 percent of ... any equity security” of a firm. 15 U.S.C. § 78p(a)(l). In brief, such beneficial owners (and directors or officers) must register, disclose their purchases and sales, and disgorge to the firm profits they made in short-swing trades — i.e., from purchases and sales of the firm’s shares within six months of each other. 15 U.S.C. § 78p(a), (b). The purpose of Section 16 is generally said to be to reveal transactions by insiders, so defined, and to prevent short-swing profit making based on non-public, material information, ie., insider trading. See, e.g., Foremost-McKesson, Inc. v. Provident Sec. Co., 423 U.S. 232, 243, 96 S.Ct. 508, 46 L.Ed.2d 464 (1976) (describing the purpose of Section 16(b)); H.R. Rep. 73-1383, at 13, 24 (1934) (stating that Section 16(a) was motivated by a belief that “the most potent weapon against the abuse of inside information is full and prompt publicity” and by a desire “to give investors an idea of the purchases and sales by insiders which may in turn indicate their private opinion as to prospects of the company”).. Section 16 relies as fundamentally on the concept of beneficial ownership as does Section 13(d). Subsequent to court decisions that both rejected the SEC’s views and read Section 16 in a mechanical way, see Reliance Elec. Co. v. Emerson Elec. Co., 404 U.S. 418, 92 S.Ct. 596, 30 L.Ed.2d 575 (1972), the SEC, in promulgating Rules 13d-3(a) and (b) stated that Section 13(d) and Section 16 had different purposes and the new rules were “not intended to affect interpretations of Section 16.” Adoption of Beneficial Ownership Disclosure Requirements, Securities Act Release No. 5808, Exchange Act Release No. 13,-291, 42 Fed.Reg. 12,342, 12,342-43 (Mar. 3, 1977). However, in 1991, the SEC harmonized Section 16’s interpretation of beneficial ownership of 10 percent with the corresponding provisions (but for a 5 percent requirement) of Section 13(d). See Ownership Reports and Trading by Officers, Directors and Principal Security Holders, Exchange Act Release No. 28,869, Investment Company Act Release No. 17,991, 56 Fed.Reg. 7242, 7244-45 (Feb. 21, 1991). By SEC rule, a “beneficial owner” under Section 16 was defined as “any person who is deemed a beneficial owner pursuant to section 13(d) of the [1934] Act.”17 C.F.R. § 240.16a-l(a)(l). One effect of this rule was to apply Rules 13d-3(a) and (b) in interpreting Section 16, perhaps a less consequential step than it seems in the context of the present issues because no great conflicts of interpretation had arisen. A perhaps more significant step was to apply Rule 13d-5(b)(l), which defines a group, discussed infra, to Section 16 determinations of whether multiple holders of equity securities are in the aggregate a “beneficial owner” of 10 percent. Thus, SEC rules interpret the term “beneficial ownership” to be the same under Section 13(d) as under Section 16. Even without Rule 16a-l(a)(l), the pertinent language of the two sections is identical, and harmonization of interpretation is normally necessary. See, e.g., Gustafson v. Alloyd Co., Inc., 513 U.S. 561, 570, 115 S.Ct. 1061, 131 L.Ed.2d 1 (1995) (“The 1933 [Securities] Act, like every Act of Congress, should not be read as a series of unrelated and isolated provisions. Only last Term we adhered to the ‘normal rule of statutory construction’ that ‘identical words used in different parts of the same act are intended to have the same meaning.’”) (quoting Dep’t of Revenue of Or. v. ACF Indus., Inc., 510 U.S. 332, 342, 114 S.Ct. 843, 127 L.Ed.2d 165 (1994)); 2A Norman J. Singer & J.D. Shambie Singer, Sutherland Statutes and Statutory Construction § 46:6 (7th ed. 2008). The provisions of Section 16 relating to beneficial ownership, and the caselaw under it, thus inform and cabin any interpretation of the meaning of beneficial ownership under Section 13(d). The caselaw under Section 16 is particularly informative with regard to whether Section 13(d) is to be interpreted as giving decisive weight to a would-be acquirer’s intentions toward a target, as the district court did, or whether a more mechanical, conduct-based interpretation is appropriate. Although modern financial transactions have generated some close cases—e.g., Kern County Land Co. v. Occidental Petroleum Co., 411 U.S. 582, 93 S.Ct. 1736, 36 L.Ed.2d 503 (1973) — the application of Section 16 is largely mechanical, that is, independent of the purposes or state of mind of parties to a transaction. See, e.g., Magma Power Co. v. Dow Chem. Co., 136 F.3d 316, 320-21 (2d Cir.1998) (“Section 16(b) operates mechanically, and makes no moral distinctions, penalizing technical violators of pure heart, and bypassing corrupt insiders who skirt the letter of the prohibition. Such is the price of easy administration.”) (internal quotation marks omitted). For example, disgorgement has not been required for a stock purchase and sale made by a board member on the same day the member resigned, when the resignation became effective before the execution of the transactions. Lewis v. Bradley, 599 F.Supp. 327, 330 (S.D.N.Y.1984) (“Bradley’s resignation was the first order of business; next, was the sale and delivery of the shares; and finally, the exercise of his option rights. That the sequence of events may have been deliberately designed is of no consequence.”); see also B.T. Babbitt, Inc. v. Lachner, 332 F.2d 255, 258 (2d Cir.1964) (“Since the interval between the purchase and the sale exceeded six months — if only by one day — any profit which Lachner may have made on the transaction is not recoverable under § 16(b).”). For another and very pertinent example, Section 16 has been held to allow a 13.2 percent shareholder to avoid disgorgement of profits made on a sale of 9.96 percent of the shares made within six months of their purchase by strategic timing of the sales. Reliance Elec., 404 U.S. at 419-20, 92 S.Ct. 596. The shareholder first sold enough shares to reduce its holdings to 9.96 percent, just below the 10 percent threshold, and then sold the rest of its shares shortly thereafter. Id. at 420, 92 S.Ct. 596. The shareholder avoided disgorgement of the profits on the second sale even though the two sales “were effected pursuant to a single predetermined plan of disposition with the overall intent and purpose of avoiding Section 16(b) liability.” Id. at 421, 92 S.Ct. 596 (internal quotation marks omitted). In so holding the Supreme Court stated: The history and purpose of § 16(b) have been exhaustively reviewed by federal courts on several occasions since its enactment in 1934. Those courts have recognized that the only method Congress deemed effective to curb the evils of insider trading was a flat rule taking the profits out of a class of transactions in which the possibility of abuse was believed to be intolerably great. As one court observed: In order to achieve its goals, Congress chose a relatively arbitrary rule capable of easy administration. The objective standard of Section 16(b) imposes strict liability upon substantially all transactions occurring within the statutory time period, regardless of the intent of the insider or the existence of actual speculation. This approach maximized the ability of the rule to eradicate speculative abuses by reducing difficulties in proof. Such arbitrary and sweeping coverage was deemed necessary to insure the optimum prophylactic effect. Thus Congress did not reach every transaction in which an investor actually relies on inside information. A person avoids liability if he does not meet the statutory definition of an “insider,” or if he sells more than six months after purchase. Liability cannot be imposed simply because the investor structured his transaction with the intent of avoiding liability under § 16(b). The question is, rather, whether the method used to “avoid” liability is one permitted by the statute. Id. at 422, 92 S.Ct. 596 (internal quotation marks and citations omitted). Given the Supreme Court’s direction to harmonize the interpretation of multiple statutory uses of identical language and SEC Rule 16a-l, the well-established approach of Section 16 governs the interpretation of “beneficial ownership of any equity security” in Section 13(d). 15 U.S.C. § 78m(d)(l). A large measure of certainty is provided by this test’s mechanical attributes, but, as Reliance Electric noted with regard to Section 16, at a cost. 404 U.S. at 422, 92 S.Ct. 596. Application of the language of Section 13(d) leads to an inevitable over-breadth — requiring disclosure where no control or influence is intended by a holder of 5 percent of shares. There is also an inevitable under-breadth, see id.- — not requiring disclosure of conduct that constitutes significant steps in an attempt to gain control but does not fall within the pertinent language. Without triggering any disclosure requirement, a potential acquirer can, for example, amass 4.9 percent of the target company’s shares. The potential acquirer may further make inquiry of some large shareholders with an eye to learning how many shares might be available for private purchases in the future and what price ranges are likely, so long as there is no implicit or explicit agreement to buy. Pantry Pride, Inc. v. Rooney, 598 F.Supp. 891, 900 (S.D.N.Y.1984) (“Section 13(d) allows individuals broad freedom to discuss the possibilities of future agreements without filing under securities laws.”). Such inquiries may cause — and be expected to cause— these other shareholders to keep or acquire more shares than they otherwise would, in anticipation of the potential acquirer deciding to make an acquisition. The same potential acquirer may line up financing in anticipation of a large purchase of the target company’s shares in a short period of time. The potential acquirer can then form a group with other like-minded investors and coordinate future plans to buy the target company’s stock, again so long as the 5 percent ownership threshold is not yet reached. The group may then cross the threshold and acquire an unlimited amount of the company’s securities over a ten-day period before being required to make disclosure. So long as “the method used to ‘avoid’ [disclosure] is one permitted by the statute,” Reliance Elec., 404 U.S. at 422, 92 S.Ct. 596, it does not matter that a firm or group of firms employing that method consciously sought to avoid disclosure under Section 13(d). That result flows from the statutory language and is not for courts to alter. However, perhaps because of the way this case was argued, none of the pertinent authority established under Section 16 was discussed by the district court, which gave overwhelming weight to the Funds’ intent. The district court also did not consider the fact that Congress has been well aware of legal issues involving swaps for years and has repeatedly passed legislation regarding them, all of which is specifically relevant to the issues in this case and generally relevant to the propriety of, or need for, courts’ adopting legal rules that Congress and the SEC have avoided. For example, as part of the 2000 amendments discussed infra, Congress exempted security-based swap agreements from the 1934 Act’s definition of a security. See infra note 6; Commodity Futures Modernization Act of 2000, Pub.L. No. 106-554, app. E, sec. 301 & 303, § 206B (amendment to the Gramm-Leaeh-Bliley Act, Pub.L. No. 106-102 (1999)), & § 3A (amendment to the 1934 Act), 114 Stat. 2763, 2763A-449 to-453 (codified at 15 U.S.C. §§ 78c-l, 78c note). In 2010, as part of the Dodd-Frank bill, Congress included security-based swaps in the 1934 Act’s definition of a security. Dodd-Frank Wall Street Reform Protection Act § 761(a)(2). However, neither exemption from, nor inclusion in, the definition of security affects the outcome here because Section 13(d) applies to securities issued by a target firm and the swap instruments in question were not issued by CSX. Nor do the legislative definitions explicitly resolve the issue of whether the long party to a cash-settled total-return equity-based swap agreement is the “beneficial owner” of referenced securities purchased as a hedge by the short party. I turn to that issue infra. My point, nevertheless, is that Congress was well aware of the issues arising from security-based swaps. In fact, security-based swap agreements are a metaphoric Alsace-Lorraine in the conflicting claims of jurisdiction by the SEC and the Commodity Futures Trading Commission (“CFTC”) over securities futures products. See Peter J. Romeo & Alan L. Dye, Section 16 Treatise and Reporting Guide § 1.02[5], at 48-49 (Michael Gettelman ed., 3d ed. 2008). The 2000 legislation, in effect at the time of the district court’s opinion and the hearing of this appeal, included a moderately lengthy and detailed amendment to the 1934 Act broadly limiting the SEC’s regulatory authority over security-based swap agreements. See Commodity Futures Modernization Act of 2000 §§ 301 & 303. In particular, that amendment prohibited the SEC from “promulgating, interpreting, or enforcing rules; [ ] or issuing orders of general applicability” in a manner that “imposes or specifies reporting or record-keeping requirements, procedures, or standards as prophylactic measures against fraud, manipulation, or insider trading with respect to any [cash-settled total-return equity swap.]” 15 U.S.C. § 78c-1(b)(2). This amendment contained exceptions to this prohibition with regard to the disclosure and disgorgement provisions of Section 16 that, inter alia, make it clear that a long party’s ownership of cash-settled total-return equity swaps was not to be calculated in determining beneficial ownership of 10 percent of equity shares. See 15 U.S.C. § 78e-l (b)(3). In 2010, the Dodd-Frank bill not only included security-based swaps in the definition of security but also amended the definition of beneficial owner contained in Section 13 of the SEA. The provision now states: (o) BENEFICIAL OWNERSHIP.— For purposes of this section and section 16, a person shall be deemed to acquire beneficial ownership of an equity security based on the purchase or sale of a security-based swap, only to the extent that the Commission, by rule, determines after consultation with the prudential regulators and the Secretary of the Treasury, that the purchase or sale of the security-based swap, or class of security-based swap, provides incidents of ownership comparable to direct ownership of the equity security, and that it is necessary to achieve the purposes of this section that the purchase or sale of the security-based swaps, or class of security-based swap, be deemed the acquisition of beneficial ownership of the equity security. Dodd-Frank Wall Street Reform Protection Act § 766(e). However, the SEC has not exercised its new authority to promulgate rules that specifically reference swaps. Rather, it has repromulgated Rule 13(d) — 3 on the ground that “[a]bsent rule-making under Section 13(o), [the amendment to Section 13(o) ] may be interpreted to render the beneficial ownership determinations made under Rule 13d-3 inapplicable to a person who purchases or sells a security-based swap.” Beneficial Ownership Reporting Requirements and Security Based Swaps, 2011 WL 933460, at *2. The SEC’s fear appears to be that, given the prior Congressional bar to its regulating cash-settled total-return equity based swaps, Rule 13d-3 could not apply to such swaps before the amendment and needed repromulgation pursuant to that amendment if the Rule were ever to apply to such swaps. Two matters of significance must be noted. First, if Rule 13d-3 did not apply to such swaps before the amendment, the district court was wrong in its legal analysis. Second, the repromulgated Rule makes no mention of security-based swaps and in the words of the amendment to Section 13(o) regulates them “only to the extent” that it applies as written. b) Beneficial Ownership I turn now to the issue of whether the Funds, as long parties to the cash-settled total-return equity swaps, are beneficial owners of referenced shares bought by short parties to hedge short positions in those swaps. The district court held that if a long party to such a swap would expect that the short party would hedge its position by purchasing shares, then the long party was a beneficial owner of those shares because it “had the power to influence” the purchase. CSX Corp., 562 F.Supp.2d at 546. The district court further found that the “only practical alternative” for the short parties to hedge was to purchase CSX shares. Id. The fact that the purchasing of CSX shares was the “only practical alternative” for short parties to hedge, as found by the district court, is not a circumstance that differentiates the swaps here from cash-settled total-return equity swaps generally. Other hedging methods for short parties exist, but these methods are exceptional. Henry T.C. Hu & Bernard Black, The New Vote Buying: Empty Voting and Hidden (Morphable) Ownership, 79 S. Cal. L.Rev. 811, 816, 837 (2006). Moreover, they also appear to involve derivatives, e.g., swaps, stock options, or stock futures, that may result in the purchasing of referenced shares as a hedge by other parties further down in the chain of transactions. Id. The existence of other hedging methods does not affect the analysis, therefore, because the arguments proffered by CSX and the district court are as applicable to these hedge shares as they are to a first short party’s purchase of hedge shares. In any event, a short party’s purchasing of shares is the most practical and common method of hedging, and long parties will expect that it will be used, if not by the immediate short party, then by another down the line. As a result, the district court’s ruling renders the long party to virtually all cash-settled total-return equity swaps a “beneficial owner” of such swaps. Thus, my discussion of the legal meaning of “beneficial owner” will assume that long parties expect short parties to hedge by buying shares. There appears to be no generally accepted or universal definition of the term “beneficial owner.” Like the term “fiduciary,” it is very context-dependent, suggesting no more perhaps than that a power — e.g., to vote shares — or an asset be used for the benefit of the “beneficial owner.” SEC v. Chenery Corp., 318 U.S. 80, 85-86, 63 S.Ct. 454, 87 L.Ed. 626 (1943) (“But to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? What obligations does he owe as a f