author: BARRINGTON D. PARKER, Circuit Judge:

text:
    Rui Gilberto Enes De VASCONCELOS, Petitioner, v. Loretta E. LYNCH, United States Attorney General, Respondent.
    No. 15-1308-ag
    August Term, 2015
    United States Court of Appeals, Second Circuit.
    Argued: May 18, 2016
    Decided: November 2, 2016

      Paul B. GROtas, New York, N.Y., for Petitioner.
    Jamie Dowd (Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Anthony P. Nicastro, Acting Assistant Director, Tracey N. McDonald, Trial Attorney, Office of Immigration Litigation, Department of Justice, Washington, D.C., on the brief), for Respondent.
    Before: KEARSE, JACOBS, and PARKER, Circuit Judges.
   BARRINGTON D. PARKER, Circuit Judge:

The Visa Waiver Program (“VWP”) allows eligible citizens and nationals of designated countries to visit the United States for up to ninety days without obtaining a visa, provided that they agree to waive any right to contest removal other than by seeking asylum. 8 U.S.C. § 1187(a), (b)(2). Prior to 2009, the Department of Homeland Security (“DHS”) required applicants to complete and physically sign the I-94W Nonimmigrant Visa Waiver Arrival/Departure Record Form, which memorializes the terms of the program and contains a certification that the applicant waives any right to a hearing. In response to legislation designed to modernize and strengthen the security of the VWP, DHS developed the Electronic System for Travel Authorization (“ESTA”), which makes the I-94W available online and enables applicants to receive an automated determination of eligibility in advance of travel.

Rui Gilberto Enes de Vasconcelos was ordéred removed by DHS without the benefit of-a hearing on the ground that he waived the right to challenge removal by submitting an ESTA application and subsequently entering the country pursuant to the VWP. We are asked to decide whether the government may establish -waiver based upon an ESTA record showing that a petitioner submitted an ESTA application and thereby certified waiver, or whether, as Vasconcelos urges, it must produce a physically signed I-94W. We hold that an ESTA record is sufficient evidence of waiver. Because the administrative record supports the agency’s finding that Vasconcelos waived his right to a hearing by submitting an ESTA application and entering the United States pursuant to the VWP, the petition is DENIED.

BACKGROUND

Vasconcelos is a citizen of Portugal and native of Angola who has resided in the United States since 1989. He last entered the country on June 25, 2012 at the port-of-entry at Champlain,. New York on the Canada-United States border. Although the circumstances of his admission are disputed, an ESTA computer-generated record indicates that, approximately two months earlier, he submitted via the ESTA an application to participate in the VWP, in which he provided biographical, passport, and other information necessary to determine his eligibility. The ESTA record also contains an “N” notation next to the field “Third Party Indicator” and a “Y” notation next to the field “Waived Rights,” reflecting that Vasconcelos personally filled out and submitted the form and certified that, by participating in the program, he waived any right to challenge removal except by seeking asylum. Admin. R. at 3.

In October 2014, while incarcerated at the Nassau County Correctional Center in East Meadow, New York for failing to pay child support, Vasconcelos was interviewed by an immigration officer. In connection with the interview, he submitted a sworn affidavit acknowledging that he had last entered the United States in June 2012 at the “New York/Canadian border, by bus,” using a “Portuguese passport.” Admin. R. at 14. An “1-94 Arrival Record” confirmed that he had entered the country on June 25, 2012 as a “Visa Waiver/Tourist (WT)” with an admission expiration date of September 23, 2012. Admin. R; at 44. Based upon this information, the immigration officer concluded that Vasconcelos had entered the United States at Champlain, New York on June 25, 2012 “as a non-immigrant Waiver Tourist (WT) under the Visa Waiver Program (VWP) for a temporary period not to exceed September 23, 2012” and was removable for failing to depart by that date. Admin. R. at 7. On March 27, 2015, Vasconcelos was served with an arrest warrant and order of removal that reiterated the immigration officer’s findings and noted that he had “waived [his] right to contest any action for removal, except to apply for asylum, having applied for admission under [the VWP].” Admin. R. at 12. Vasconcelos timely petitioned for review.

DISCUSSION

We have jurisdiction over final orders of removal, 8 U.S.C. § 1252(a)(1), and may review such orders issued pursuant to § 1187 for the purpose of determining whether the VWP’s statutory criteria have been satisfied, see, e.g., Gjerjaj v. Holder, 691 F.3d 288, 292-93 (2d Cir. 2012). We review the agency’s factual findings for substantial evidence and will set them aside only if “any reasonable adjudicator would be compelled to conclude to the contrary.” Bah v. Mukasey, 529 F.3d 99, 110 (2d Cir. 2008) (quoting 8 U.S.C. § 1252(b)(4)(B)). Our consideration of questions of law and the application of law to undisputed facts is de novo. See Shabaj v. Holder, 602 F.3d 103, 105 (2d Cir. 2010).

I.

Congress established the VWP in 1986 to facilitate international travel and tourism, improve relations with friendly nations, and reduce the administrative burdens that result from unnecessary visa processing by authorizing the Attorney General and the Secretary of State to waive the visa requirement for nonimmi-grant aliens who meet certain statutory requisites. See 8 U.S.C. § 1187(a); H.R. Rep. No. 99-682, pt. I, at 50 (1986), reprinted in 1986 U.S.C.C.A.N. 5649, 5654. To be eligible to participate in the program, a person must, among other things, be a citizen or national of a designated country who is in ■ possession of a valid, unexpired passport, does not present a threat to national security, and promises to depart the country within ninety days of entry. 8 U.S.C. § 1187(a)(l)-(3), (6). Participants also must agree to waive any right “to contest, other than on the basis of an application for asylum, any action for removal.” Id. § 1187(b)(2). If a VWP entrant fails to leave the country within the ninety-day time frame (or becomes removable for some other reason), the DHS district director for the jurisdiction in which he is located may order him removed without referring him to an immigration judge for a hearing. 8 C.F.R. §§ 217.4(b), 1208.2(c)(iv). Because a continuously present resident alien has a constitutional right to a pre-removal hearing, e.g., Landon v. Plasencia, 459 U.S. 21, 32, 103 S.Ct. 321, 74 L.Ed.2d 21 (1982), the waiver of that right acts as the “linchpin of the program,” Handa v. Clark, 401 F.3d 1129, 1135 (9th Cir. 2005), ensuring that the statute accomplishes “Congress’s goal of allowing VWP participants expeditious entry into the country but streamlining their removal,” Gjerjaj, 691 F.3d at 293.

Before 2009, applicants were required to present upon arrival a “completed, signed Form I-94W,” which memorializes the terms of the program and collects biographical and other information necessary to determine eligibility. 8 C.F.R. § 217.2(b)(1); Bayo v. Napolitano, 593 F.3d 495, 499 (7th Cir. 2010) (en banc). The I-94W also contains a certification that the applicant “hereby waive[s] any right[ ] ... to contest, other than on the basis of an application for asylum, any action in deportation.” In Galluzzo v. Holder, we held that because “we indulge every reasonable presumption against waiver of fundamental constitutional rights,” the government cannot rely solely upon a person’s status as a VWP entrant to show that he waived his right to a hearing, but rather must offer “explicit' evidence of waiver.” 633 F.3d 111, 114-15 (2d Cir. 2011) (citation omitted) (emphasis removed). A physically signed I-94W thus played a central role in the program’s operation.

In the wake of the terrorist attacks on the United States on September 11, 2001, Congress passed the Implementing Recommendations of the 9/11 Commission Act of 2007, Pub. L. No. 110-53, 121 Stat. 266, in order to “modernize and strengthen the security of the visa waiver program.” 121 Stat. 266 § 711(b), 121 Stat. at 338. Unlike visitors who obtain a visa at a consular post overseas before traveling, VWP participants were not screened for entry until they arrived in the United States. See Changes to the Visa Waiver Program to Implement the Electronic System for Travel Authorization (ESTA) Program, 73 Fed. Reg. 32,440, 32,441-42 (June 9, 2008). As a result, thousands were turned away at the port-of-entry annually, “causing significant expense, delay, and -inconvenience for those aliens, other travelers, and the U.S. government.” Id. at 32,442. In addition, the security vulnerabilities of such a system created a risk that terrorists and other criminal actors might exploit the program to enter the country. Privacy Act of 1974; Department of Homeland Security/U.S. Customs and Border Protection (DHS/CBP)-009 Electronic . System for Travel- Authorization (ESTA) System of Records, 79 Fed. Reg, 65,414, 65,414 (Nov. 4, 2014). To address these concerns, the 9/11 Commission Act requires the Secretary of Homeland Security, in consultation with the Secretary of State, to develop and implement a “fully automated electronic travel authorization system ... to collect such biographical and other information as the Secretary ... determines necessary to determine, in advance of travel, the eligibility of, and whether there exists a law enforcement or security risk in permitting, the alien to travel to the United States.” 121 Stat. 266, § 711(d)(1)(E), 121 Stat. at 344 (adding 8 U.S.C. § 1187(h)(3)(A)). The Act further provides that “each alien traveling under the [VWP] shall, before applying for admission to the United States, electronically provide to the system” such information. Id. § 711(d)(1) (A) (ii), 121 Stat. at 341 (adding 8 U.S.C. § 1187(a)(ll)).

Pursuant to these directives, DHS developed and implemented the ESTA, which makes the I-94W available online in twenty-two languages and enables applicants to receive an automated determination of eligibility prior to travel. See Official ESTA Application, https://esta.cbp.dhs.gov/esta/ application.html?execution=elsl; Changes to the Visa Waiver Program to Implement the Electronic System for Travel Authorization (ESTA) Program and the Fee for Use of the System, 80 Fed. Reg. 32,267, 32,269 (June 8, 2015) (“ESTA .provided] for an automated collection of the information required on the Form I-94W ... paper form ... in advance of travel.”). Under the new system, applicants who intend to travel by air or sea must submit an ESTA application and receive a travel authorization before departing to the United States. Id. at 32,267. Applicants who enter the country by land currently need not submit an ESTA application, but if they have an approved ESTA, they may bypass the requirement of completing a paper I-94W at the port-of-entry. See Frequently Asked Questions, https://esta.cbp.dhs.gov/esta/ application.html?execution=elsl. Information submitted via the ESTA is checked against security and law enforcement databases and stored in the system to satisfy the I-94W retention requirement. See Privacy Act of 1974; Department of Homeland Security, U.S. Customs and Border Protection—Electronic System for Travel Authorization (ESTA), Systems of Records, 73 Fed. Reg. 32,720, 32,720 (June 10, 2008). An authorization to travel is valid for two years, or until the applicant’s passport expires, and may be used repeatedly during that time. 8 C.F.R. § 217.5(d)(1); The Electronic System for Travel'Authorization: Mandatory Compliance Required for Travel Under the Visa Waiver Program, 73 Fed. Reg. 67,354, 67,354 (Nov. 13, 2008). Although an approved ESTA expedites the admission process, a determination of eligibility does not mean that a person is admissible; that determination is instead made, as under the pre-ESTA framework, by a Customs and Border Protection officer at the port-of-entry. - 8 U.S.C. § 1187(h)(3)(C)(ii); 8 C.F.R. § 217.5(f)(1).

II.

This petition requires us to resolve whether the government may establish waiver based upon an ESTA record. Vas-concelos contends that, under Galluzzo, the government must obtain a physically signed I-94W, notwithstanding the implementation of the new electronic system. The government takes the view that Gal-luzzo is not determinative because it addresses the burden of proof under the pre-ESTA framework and, in any event, the ESTA record is “explicit evidence of waiver,” 633 F.3d at 114, because it shows that Vasconcelos submitted an ESTA application and thereby certified that he waived any right to contest removal.

We agree with the government that an ESTA record is sufficient to establish waiver. Nothing in Galluzzo requires the production of a physically signed I-94W, even under the pre-ESTA, paper-based system. On the contrary; we reasoned that the government had failed to demonstrate waiver because the record was “silent as to whether Galluzzo signed or otherwise agreed to waive his rights to contest removal.”' Id. at 115 (emphasis added); cf. Bradley v. Att’y Gen., 603 F.3d 235, 237-239 (3d Cir. 2010) (finding sufficient evidence of waiver where the petitioner admitted in a declaration that he had signed a form, presented it to a customs officer, and was then admitted into the United States, and the record contained the relevant portion of a handwritten Form I-94W with Bradley’s name and date of birth, and the stamped date on which Bradley was admitted). Here, the ESTA record shows that Vasconcelos personally completed and submitted ■ the application and thereby agreed that he waived the right to a hearing. As a record generated by public officials in the ordinary course of their duties, it is presumed reliable and may serve as competent evidence in immigration proceedings. See, e.g., Felzcerek v. I.N.S., 75 F.3d 112, 117 (2d Cir. 1996) (citing Fed. R. Evid. 803(8) to justify reliance on Form I-213).

In any event, we had no occasion in Galluzzo to consider what proof of waiver would be appropriate under an electronic application system, and we see no constitutional basis for categorically prohibiting the electronic waiver of rights. See, e.g., United States v. Leja, 448 F.3d 86, 88-89, 92-93 (1st Cir. 2006) (rejecting the notion that the defendant’s waiver of her right to a jury trial, effected through counsel’s electronic signature, was invalid). Indeed, the only other court of appeals to consider the issue summarily found that the ESTA’s electronic waiver was valid. See Cho v. Att’y Gen., 606 Fed.Appx. 574, 575 (11th Cir. 2015) (per curiam). We also did not consider in Galluzzo the implications of the 9/11 Commission Act, which was passed, as noted, to modernize and strengthen the security of the VWP by requiring the Secretary to “develop and implement a fully automated electronic travel authorization system,” 8 U.S.C. § 1187(h)(3)(A) (emphasis added), that enables DHS to collect from all applicants the information necessary to determine their eligibility and security risk in advance of travel, see id. § 1187(a)(ll). Pursuant to the Act, DHS has included in the ESTA application a certification of waiver—a key requirement for determining eligibility. Were the government precluded from relying upon the ESTA’s electronic certification of waiver, it would be impossible for DHS to implement the system envisioned by Congress. Vasconcelos fails to persuade us that the use of electronic certification of waiver such as the one at issue here warrants upending the statutory framework.

Because our case law does not foreclose the use of electronic waiver, we hold that an ESTA record showing that a petitioner submitted an ESTA application and thereby certified that he waived his right to a hearing is sufficient to establish waiver. That does not mean, of course, that an ESTA record is invariably conclusive evidence of waiver. While records generated by public officials in the ordinary course of their duties are presumed reliable, that presumption may be rebutted by evidence that “the sources of information or other circumstances indicate a lack of trustworthiness,” or by evidence that contradicts or impeaches the record’s contents. E.g., Felzcerek, 75 F.3d at 117 (quoting Fed. R. Evid. 803(8)). Vasconcelos gives us little reason, however, to doubt the reliability of the ESTA record in this case. Although he claims that the government should not be permitted to rely on a “self-serving” computer record, Pet’r’s Br. at 11, the fact that the record supports the government’s position is irrelevant to its reliability.

Unable to undermine the ESTA record itself, Vasconcelos contends that even if he submitted an ESTA application in which he waived his right to a hearing, he is not constrained by the strictures of the VWP because he did not gain admission to the country pursuant to the program. We recognize that Vasconcelos might not be bound by his waiver if he did not receive the benefit of expedited admission. See Gjerjaj, 691 F.3d at 292 (“The VWP offers aliens the benefit of expedited entry as a quid pro quo in exchange for a waiver of rights.”) (internal quotation marks omitted). We believe, however, that the agency’s determination that he entered the country pursuant to the program based upon his ESTA application is supported by substantial evidence. The ESTA record shows that Vasconcelos submitted an application approximately two months before he was admitted on June 25, 2012, Vasconcelos affirmed that he was able to gain entry to the country with a “Portuguese passport” alone, Admin. R. at 14, and the 1-94 Arrival Record indicates that he was logged upon arrival as a “Visa Waiver/Tourist,” Admin. R. at 44.

' Vasconcelos’s efforts to undercut the agency’s finding do not convince us otherwise. He argues that his ESTA application could not have been approved because it is missing certain requested information, including a foreign address, an address in the United States where he would be residing, a phone number, and airline and flight information. But because none of the missing information is statutorily required to determine eligibility, it is unclear whether approval was contingent upon its inclusion, and we cannot say on the basis of these omissions that the application could not have been approved. Vasconcelos also surmises that his application in fact was not approved because the ESTA record includes the notation “Expired” next to the field “Application Status.” Admin. R. at 3. That notation, however, merely reflects that on the date on which the ESTA record was retrieved from DHS’s database (June 16, 2015), more than two years had passed since Vasconcelos’s application had been approved. See Privacy Act of 1974; Department of Homeland Security, U.S. Customs and Border Protection—Electronic System for Travel Authorization (ESTA), Systems of Records, 73 Fed. Reg. 32,720, 32,724 (June 10, 2008).

Along the same lines, Vasconcelos claims that he could not have participated in the VWP because the administrative record does not contain a copy of his passport and a round-trip ticket, both of which are, in his view, statutory prerequisites for participating in the program. But we have never required the government to retain proof that a petitioner satisfied each of the statute’s numerous requirements for participation at the time of entry. Quite the opposite, we have recognized that a waiver is binding on a person who gains admission under the VWP even if they were ineligible to participate in the program in the first place. See Shabaj, 602 F.3d at 105-06, At any rate, the record shows that Vas-concelos had a valid, unexpired passport at the time of entry, as the ESTA record includes his passport information and he confirmed in his sworn affidavit that he was able to enter the country using a “Portuguese passport.” Admin. R. at 14. And although the record does not indicate that Vasconcelos had a round-trip ticket, the Secretary has waived that requirement for participants who, like him, enter the country by land. See 8 U.S.C. § 1187(a)(8); 8 C.F.R. § 217⅛2).

. Citing DHS'regulations, Vasconcelos alternatively asserts that he could not have participated in the VWP based upon his ESTA application because, as a person arriving by land, he was ineligible to úse the electronic system and was required to physically sign an I-94W when he crossed the border. The provision on which he relies, however, simply states that “[a]n applicant arriving at a land-border port-of-entry will be charged a fee ... for issuance of Form I-94W.” 8 C.F.R. § 217.2(c)(2). It does not prohibit applicants arriving by land from submitting an ESTA application beforehand and using that submission to satisfy the I-94W requirement, which is precisely what other DHS regulations permit. Frequently Asked Questions, https://esta.cbp.dhs.gov/ esta/application.html?execution=elsl.

Vasconcelos lastly relies on two portions of the administrative record which he believes show that he entered the country using a visa, rather than as a visa waiver tourist. He points first to the 1-94 Arrival Record and claims that only the I-94W is used in connection with visa waiver entrants. But he offers no support for this contention, and the. 1-94 provides that “[t]his form must be completed by all persons except U.S. citizens, returning resident' aliens, aliens with immigrant visas, and Canadian Citizens visiting or in transit.” It would appear, then, that DHS maintains an 1-94 and I-94W for persons admitted under the program, so there is nothing unusual about the presence in the record of an 1-94. Indeed, Vasconcelos’s own 1-94 Arrival Record contains a field for “Visa Class” and indicates that he was admitted as a “Visa Waiver/Tourist.” This entry would be nonsensical if VWP entrants were not or could not be assigned I-94 records. Cf. Mokarram v. Att’y Gen., 316 Fed.Appx. 949, 950-51 (11th Cir. 2009) (per curiam) (observing that the petitioner’s “1-94 Departure Record” contained a “WT” notation, indicating that he had been admitted under the VWP).

Vasconcelos also observes that he was provided with a Form 1-826 Notice of Rights and Request for Deposition, which states, “You have a right to a hearing before the Immigration Court to determine whether you may remain in the United States.” Admin. R. at 20. By supplying him with this form, he argues, DHS acknowledged that he had entered the country as a visitor entitled to a hearing, and not under the VWP. We are not persuaded. When initiating removal proceedings, the DHS is required by statute to provide an alien with a notice of rights, including the right to a hearing before an immigration officer, 8 U.S.C. § 1229; see Nolasco v. Holder, 637 F.3d 159, 163-64 (2d Cir. 2011). The fact that Vasconcelos was provided with the standard notice of the right to a hearing does not mean that he could not have previously waived that right as a condition of entry under the VWP.

While potential irregularities in the administrative record might cause a reasonable adjudicator to conclude that Vas-concelos did not enter the country pursuant to the VWP based on his ESTA application, we cannot say that any reasonable adjudicator would be compelled to reach that conclusion. Because DHS’s factual findings are supported by substantial evidence, they are determinative. Having received the benefit of expedited entry in exchange for a promise of expedited removal, Vasconcelos is bound by the terms of the program and is not entitled to a hearing. See Gjerjaj, 691 F.3d at 292.

CONCLUSION

For the foregoing reasons, and finding Vasconcelos’s remaining arguments without merit, the petition is DENIED.

      . Portugal is among the thirty-six designated countries. 8 C.F.R. § 217.2(a).

      . U.S. Customs and Border Protection, Form I-94W Nonimmigrant Visa Waiver Arrival/Departure Record, available at https://www.cbp. gov/sites/default/files/documents/% 20I-94W% 20English% 20% 2811-11 % 29% 20FINAL% 20%28reference%20only%29.pdf (last visited October 26, 2016).

      . U.S. Customs and Border Protection, Form I-94W Nonimmigrant Visa Waiver Arrival/De- ' parture Record, available at https://www.cbp. gov/sites/defaull/files/documents/% 20I-94W% 20English% 20% 2811-11% 29% 20FINAL% 20% 28reference% 20only% 29.pdf (last visited October 26, 2016).


source: Caselaw Access Project

author: WINTER, Circuit Judge:

license: Public Domain

text:
    Robert LOWINGER, Plaintiff-Appellant, Thomas E. Nelson, individually and on behalf of all others similarly situated, Rock Southward, derivatively on behalf of himself and all others similarly situated, Avatar Securities, LLC, Meredith Bailey, on behalf of themselves and all others similarly situated, Dmitri Bougakov, on behalf of themselves and all others similarly situated, Ryan Cefalu, on behalf of themselves and all others similarly situated, Lorrain Chin, First New York Securities L.L.C., Atish Gandhi, on behalf of themselves and all others similarly situated, Phillip Goldberg, on behalf of themselves and all others similarly situated, Eric Hamrick, on behalf of themselves and all others similarly situated, Steve Jarvis, Joe Johnson, on behalf of themselves and all others similarly situated, Nuhket Kayahan, on behalf of themselves and all others similarly situated, David Kenton, on behalf of themselves and all others similarly situated, Dennis Kuhn, on behalf of themselves and all others similarly situated, Benjamin Levine, on behalf of themselves and all others similarly situated, Katherine Loiacono, on behalf of themselves and all others similarly situated, Crystal McMahon, on behalf of themselves and all others similarly situated, George Michalitsianos, on behalf of themselves and all others similarly situated, Randy Teresa Mielke, on behalf of themselves and all others similarly situated, Jacinto Rivera, on behalf of themselves and all others similarly situated, Faisal Sami, on behalf of themselves and all others similarly situated, Sanjeev Sharma, on behalf of themselves and all others similarly situated, Colin Suzman, on behalf of themselves and all others similarly situated, T3 Trading Group, LLC, Vijay Akkaraju, Alexis Alexander, as custodian for Chloe Sophie Alexander, Brian Roffe Profit Sharing Plan, individually and on behalf of all others similarly situated, Jose Galvan, Mary Galvan, Robert Herpst, individually and on behalf of all others similarly situated, Sanjay Israni, on behalf of themselves and all others similarly situated, KBC Asset Management N.V., and the Employees’ Retirement System of the Government of the Virgin Islands (Collectively, the Institutional Investors), Douglas M. Lightman, individually and on behalf of all others similarly situated, Dennis Palkon, individually and on behalf of all others similarly situated, Rick Pond, Jacob Salzmann, individually and on behalf of all others similarly situated, Michael Spatz, Maren Twining, individually and on behalf of all others similarly situated, Goldrich Cousins P.C. 401(k) Profit Sharing Plan & Trust, Irving S. Braun, individually, Edward Childs, derivatively on behalf of himself and all others similarly situated, Kathy Reichenbaum, individually and on behalf of all others similarly situated, Jun Yan, on behalf of herself and all others similarly situated, Elbita Alfonso, Vicky Jones, Phyllis Peterson, Jerry Rayborn, on behalf of themselves and all others similarly situated, Edward Vernoff, Justin f. Lazard, on behalf of himself and all others similarly situated, Sylvia Gregorcyzk, on behalf of herself and all others similarly situated, Peter Brinckerhoff, Garrett Garrison, David Goldber, individually and on behalf of all others similarly situated, Kevin Hyms, individually and on behalf of all others similarly situated, Richard P. Eannarino, individually and on behalf of all others similarly situated, Peter Mamula, individually and on behalf of all others similarly situated, Khodayar Amin, on behalf of himself and all others similarly situated, Elliot Leitner, individually and on behalf of all others similarly situated, Barbara Steinman, on behalf of herself and all others similarly situated, Howard Savitt, on behalf of himself and all others similarly situated, Chad Roderick, Eugene Stricker, individually and on behalf of all others similarly situated, Steve Sexton, individually and on behalf of all others similarly situated, Keith Wise, individually and on behalf of all others similarly situated, Jonathan R. Simon, James Chang, individually and on behalf of all others similarly situated, Sameer Ansari, individually and on behalf of all others similarly situated, Darryl Lazar, individually and on behalf of all others similarly situated, Michael Lieber, individually and on behalf of other similarly situated, Thomas J. Ahrendtsen, Aaron M. Levine, individually and on behalf of all others similarly situated, Karen Cuker, individually and on behalf of all others similarly situated, Brian Gralnick, individually and on behalf of all others similarly situated, Jennifer Stokes, individually and on behalf of all others similarly situated, Vernon R. DeMois, Jr., individually and on behalf of all others similarly situated, Hal Hubuschman, derivatively on behalf of Facebook, Inc., Edward Shierry, individually and on behalf of all others similarly situated, Janis Fleming, William Cole, derivatively on behalf of Facebook, Inc., Steve Griffis, Holly McConnaughey, derivatively on behalf of Facebook Inc., Gaye Jones, derivatively on behalf of Facebook Inc., Lidia Levy, on behalf of herself and all others similarly situated, Plaintiffs, v. MORGAN STANLEY & CO. LLC, J.P. Morgan Securities LLC, Goldman Sachs & Co., and Facebook, Inc., a Delaware corporation, Defendants-Appellees, Barclays Capital Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Erskine B. Bowles, James W. Breyer, David Spillane, David A. Ebersman, Allen & Company LLC, BMO Capital Markets Corp., Blaylock Robert Van LLC, Donald E. Graham, C.L. King & Associates, Inc., Reed Hastings, Cabrera Capital Markets, LLC, Castleoak Securities, L.P., Peter A. Thiel, Citigroup Global Market, Inc., Mark E. Zuckerberg, Cowen and Company, LLC, Credit Suisse Securites (USA) LLC, Sheryl K. Sandberg, Deutsche Bank Securities Inc., Cipora Herman, E Trade Securities LLC, Itau BBA USA Securities, Inc., Lazard Capital Markets LLC, Lebenthal & Co., LLC, Loop Capital Markets LLC, M.R. Beal & Company, Macquarie CapitaL (USA) INC., Muriel Siebert & Co., Inc., Oppenheimer & Co., Incorporated, Pacific Crest Securities LLC, Piper Jaffray & Co., RBC Capital Markets, LLC, Raymond James & Associates, Inc., Samuel A. Ramirez & Company, Inc., Stifel, Nicolaus & Company, Inc., The Williams Capital Group, L.P., Wells Fargo Securities, LLC, William Blair & Company, L.L.C., NASDAQ OMX Group, Incorporated, Lawrence Corneck, individually and on behalf of all others similarly situated, Jill D. Simon, Citigroup Global Markets Inc., Allen & Facebook (sic) LLC, William Blair & Facebook (sic) LLC, M.R. Beal & Facebook (sic) Incorporated, Cowen and Facebook (sic) LLC, Stifel Nicholas & Facebook (sic) Incorporated, Samuel A. Ramirez & Facebook (sic) INC, Kevin Hicks, individually and on behalf of all others similarly situated, Linh Luu, individually and on behalf of all others similarly situated, Harvey Lapin, individually and on behalf of all others similarly situated, King & Associates, Inc., David E. (sic) Ebersman, Nick E. Tran, The NASDAQ Stock Market L.L.C., a Foreign Limited Liability Company, NASDAQ Stock Market, Incorporated, NASDAQ OMX Group, Incorporated, Uma M. Swaminathan, Robert Greifeld, Anna M. Ewing, Marc L. Andreessen, Defendants.

    Docket No. 14-3800-cv
    August Term, 2014
    United States Court of Appeals, Second Circuit.
    Argued: May 15, 2015
    Decided: November 3, 2016

      JEFFREY S. ABRAHAM (Mitchell M.Z. Twersky & Philip T. Taylor on the brief), Abraham, Fruchter & Twersky, LLP, New York, NY, for Plaintiff-Appellant.
    JAMES P. ROUHANDEH (Charles S. Duggan & Andrew Ditchfield on the brief), Davis Polk & Wardwell LLP, New York, NY, for Defendants-Appellees Lead Underwriters.
    Andrew B. Clubok, Kirkland & Ellis LLP, New York, NY, for Defendant-Ap-pellee Facebook, Inc.
    Michael A. Conley, John W. Avery, Nicholas J. Bronni, Securities and Exchange. Commission, Washington, DC, for Amicus Curiae Securities and Exchange Commission. .
    Before: WINTER, LOHIER, and CARNEY, Circuit Judges.

       The Clerk is directed to amend the caption as above.

   WINTER, Circuit Judge:

Robert Lowinger appeals from Judge Sweet’s dismissal of his complaint pursuant to Fed. R. Civ. P. 12(b)(6). The complaint asserted claims under the Securities Exchange Act of 1934, 15 U.S.C. § 78p(b), against, inter alia, appellees Goldman Sachs & Co., Morgan Stanley & Co., LLC, and J.P. Morgan Securities LLC (collectively “Lead Underwriters”). It sought to hold them liable under Section 16(b) for disgorgement of short-swing profits received in connection with their sales and purchases of shares in the course of Face-book, Inc.’s initial public offering (“IPO”).

Section 16(b) requires a “beneficial owner” of ten percent or more of an issuer’s stock to disgorge all profits realized from short sales or purchases of that security within a six-month period. See 15 U.S.C. § 78p(b). The Lead Underwriters alone did not meet the ten-percent threshold. However, “beneficial owner,” as defined in Section 13(d) of the Exchange Act, includes “groups.” Appellant contends'that the Lead Underwriters and certain pre-IPO shareholders together formed a group under Section 13(d).

The group was allegedly formed by lockup agreements between the Lead Underwriters and pre-IPO Shareholders (“Shareholders”). The lock-up agreements prevented the Shareholders from selling their stock for a specified period of time except as permitted by the Lead Underwriters. The district court dismissed the complaint on the grounds that the lock-up agreements alone did not render the Lead Underwriters beneficial owners of the aggregated shares held by the Shareholders under Section 13(d). Because' we agree that this standard form lock-up agreement is insufficient, on its own, to establish a group under Section 13(d), we affirm.

BACKGROUND

Upon review of a dismissal of a complaint under Fed. R. Civ. P. 12(b)(6), the facts, and inferences to be drawn from those facts, are viewed in the light most favorable to the plaintiff. Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002).

This appeal arises from the May 18, 2012 IPO by Facebook, Inc. (“Facebook”). The offering was underwritten by a syndicate of thirty-three financial firms (collectively, “Underwriters”), including the three Lead Underwriters. Goldman was a Lead Underwriter, and some Goldman subsidiaries owned Facebook shares. As part of the IPO process, each of the Shareholders (who, in the aggregate, owned more than ten percent of Facebook’s common stock) entered into lock-up agreements with the Lead- Underwriters in order to “induce the Underwriters that may participate in the Public Offering to continue their efforts in connection with the Public Offering.” J. App’x at 73. Appellant makes no claim that these lock-up agreements departed from standard underwriting practices.

The lock-up agreements generally provided that the Shareholders would not sell or otherwise dispose of Facebook stock for periods ranging from 91 days to 211 days after the date of the Prospectus without the consent of Morgan Stanley as agent for the Lead Underwriters. The agreements were disclosed in Facebook’s Prospectus, and Registration Statement.

As is common in IPOs, the Registration Statement and Prospectus alerted investors that the Underwriters might “over-allot,” i.e., sell more than the 421 million shares earmarked for the IPO. Permitting such sales allows underwriters to stabilize fluctuating share prices during an offering by increasing the supply of shares after the offering price has been' determined. This ensures (and assures investors) that the entire underwritten amount is sold. Underwriters generally hedge this extra allotment by establishing a short position on oversold shares while simultaneously holding the shares long. Underwriters are thus protected against upward or downward movements in the stock’s price. The Facebook IPO permitted the Underwriters to cover this short position either by purchasing the requisite additional, shares directly from Facebook and the Shareholders at a fixed price (per the terms of a so-called “over-allotment option,” or “Green Shoe”), or by purchasing shares directly from the open market once secondary trading had commenced.

Because of their role in the IPO, the Lead Underwriters were necessarily granted access to nonpublic financial information concerning Facebook. In March and April 2012, Facebook shared its internal forecasts with the Lead Underwriters for both the second quarter of 2012 and for fiscal year 2012. These forecasts estimated revenue between $1.1 and $1.2 billion and approximately $5 billion, respectively. That information was “incorporated into materials used by the Underwriters to market the Facebook IPO to investors in a road show commenced on May 7, 2012.” J. App’x at 20.

That same day, May 7, however, the complaint alleges, Facebook revised its revenue estimates downward for the second quarter to the low end of the $1.1 to $1.2 billion range and projected the 2012 fiscal year estimate to be 3% to 3.5% lower than the previously forecasted $5 billion. Facebook shared those concerns with Morgan Stanley. On May 9, Facebook amended its Registration Statement to advise potential investors of its revised estimates.

On May 17 and 18, 2012, the Underwriters sold 484,418,657 shares of Facebook common stock to the public at prices ranging from $38.00 to $42.05 per share. Face-book received $37,582 for each share sold and the Underwriters received discounts and commissions amounting to $0,418 per share. Over 310 million of these shares were sold by the Lead Underwriters, which generated $129,000,000 in discounts and commissions for appellees.

Stating that the amendment to the Registration Statement did not adequately disclose the revised estimates, the complaint alleges that only after trading closed on May 18, 2012, did the investors become aware that the Underwriters had already cut their estimates for Facebook ahead of the IPO. On May 21, the first trading day thereafter, Faeebook’s stock price declined to “$34.03 on extremely high volume reflecting a decline of more than 10%” from the IPO price. J. App’x at 25. On May 22, 2012, a report by Reuters further divulged that the revised projections had been revealed by the Underwriters to select clients in a manner that avoided a general and direct disclosure of the relevant material information. The decline continued and on May 22, Facebook’s stock closed at $31 per share—18.42% below the IPO price— on high trading volume.

During that period, the Underwriters declined to exercise their Green Shoe option to cover their short positions, choosing instead to purchase the over-allotted shares directly on the secondary market, at prices lower than the Green Shoe fixed price of $38.00 per share. As a result, the Underwriters “made a profit of about $100 million with the bulk of that profit [having been] made on” May 21. J. App’x at 26 (internal citation and quotation marks omitted).

On September 12, 2012, appellant, a Fa-cebook shareholder, made a demand on Facebook that it compel J.P. Morgan, Morgan Stanley, and Goldman to disgorge their profits—as explained infra, calculated under Section 16(b) by subtracting the sales prices of May 17 from the purchase prices during the following four days. Fa-cebook declined to bring suit, and appellant filed his complaint on June 12, 2013.

On May 2, 2014, the district court granted appellees’ motion to dismiss the complaint. It held that because appellant’s Section 13(d) group allegation was based entirely on the lock-up agreements, it was insufficient to state a claim under Section 16(b). The district court noted that “[b]e-cause lock-up agreements are standard industry practice,” they are, without more, “insufficient to establish a Section 16(b) group.” In re Facebook, Inc., IPO Sec. & Derivative Litig., 986 F.Supp.2d 544, 553 (S.D.N.Y. 2014). The district court declined to reach the alternative argument that the Underwriters’ transactions were exempt under SEC Rule 16a-7 as part of a good faith underwriting.

This appeal followed. We solicited, and received, the views of the SEC, as amicus curiae, relevant to the disposition of this appeal.

DISCUSSION

We review de novo a district court’s dismissal of a complaint pursuant to Rule 12(b)(6). See Chambers, 282 F.3d at 152. To survive dismissal, a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

Section 16(a) of the Exchange Act provides that any director, officer, or “beneficial owner of more than 10 percent of’ a firm’s securities, commonly called “statutory insiders,” must report to’the SEC the amount owned and must disclose changes in ownership. 15 U.S.C. § 78p(a). Section 16(b), intended to prevent the defined insiders from profiting from short-swing variations in share price, imposes a strict-liability rule for disgorgement of profits. It states:

For the purpose of preventing the unfair use of information which may have been obtained by such beneficial owner ... by reason of his relationship to the issuer, any profit realized by him from any purchase and sale ... of any equity security of such issuer ... within any period of less than six months ... shall inure to and be recoverable by the issuer, irrespective of any intention on the part of such beneficial owner ... in entering into such transaction.

15 U.S.C. § 78p(b). A disgorgement action may be brought by the issuer or on behalf of the issuer by a security holder, like appellant. Because Section 16(b) operates regardless of intent and calculates “profits” in an automatic and non-intuitive way, we have cautioned that Section 16(b) is a “blunt instrument” to be confined within “narrowly drawn limits.” Magma Power Co. v. Dow Chem. Co., 136 F.3d 316, 321 (2d Cir. 1998) (internal quotation marks omitted).

To .state a claim, the complaint here must allege facts demonstrating that appellees were at relevant times statutory insiders, i.e., as pertinent here, beneficial owners of more than ten percent of Face-book’s stock. Congress did not explicitly define the term “beneficial owner,” see Levy v. Southbrook Int’l Invs., Ltd., 263 F.3d 10, 14 (2d Cir. 2001), but the SEC has adopted Exchange Act Rule 16a-l, defining beneficial owner to mean “any person who is deemed a beneficial owner pursuant to Section 13(d) of the [Exchange] Act and the rules thereunder,” 17 C.F.R. § 240 16a-l(a); see also Ownership Reports and Trading by Officers, Directors and Principal Security Holders, Exchange Act Release No. 34-28869, 56 Fed. Reg. 7242, 7244 (Feb. 21,1991). Section 13(d) requires any person acquiring beneficial ownership of five percent or more of a corporation’s common stock to disclose certain information. See 15 U.S.C. § 78m(d). Section 13(d)’s purpose is to compel disclosure of certain events that may portend changes in corporate control. Wellman v. Dickinson, 682 F.2d 355, 365 (2d Cir. 1982).

Exchange Act Rule 13d-3(a) describes a beneficial owner as “any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has dr shares: (1) Voting power ...; 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). Additionally, according to Section 13(d)(3), “[w]hen 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)(3); see also 17 C.F.R. § 240.16a-l(a)(l). Ultimately, according to Exchange Act Rule 13d—5(b)(1), “[w]hen two or more persons agree to act together for the purpose of acquiring, holding, voting or disposing of equity securities of an issuer, the group formed thereby shall be deemed to have acquired beneficial ownership, for purposes of section [ ] 13(d) ... of all equity securities of that issuer beneficially owned by any such persons.” 17 C.F.R. § 240.13d-5(b)(l). This Rule tracks the language of Section 13(d), except for its addition of “voting” to the acts that trigger a “group” finding.

It is agreed that the Underwriters themselves did not hold ten percent of Facebook’s stock. Rather, appellant alleges that the Underwriters were members of a group that in the aggregate held ten.percent of Facebook shares. This group was allegedly formed by the lock-up agreements between the Lead Underwriters and Shareholders, which prevented the Shareholders from selling (“disposing,” in statutory language) their pre-IPO shares of Facebook stock for a specified period of time after the IPO without the Lead Underwriters’ consent.

A plain language argument suggests application of Section 13(d), but we have explicitly avoided holding that such an agreement, without more, forms a group under Section 13(d). Rather, we have stated only that a lock-up agreement “may bear upon” the question of whether a group exists or that evidence of coordination in acquiring, holding, or disposing of securities may demonstrate the existence of a group. Morales v. Quintel Entm’t, Inc., 249 F.3d 115, 127 (2d Cir. 2001); see also CSX Corp. v. Children’s Inv. Fund Mgmt. (UK) LLP, 654 F.3d 276, 283 (2d Cir. 2011) (noting that the “touchstone” of the court’s finding of a group is that “the members combined in furtherance of a common objective” to acquire, hold, vote or dispose of securities) (internal quotation marks omitted).

Our reluctance to recognize the existence of a “group,” notwithstanding a contractual arrangement explicitly limiting the disposal of shares, reflects the fact that lock-up agreements, rather than being agreements “to act together,” are generally one-way streets keeping certain shareholders out of the IPO market for a sped-fied period of time or without compliance with other restrictions, as discussed immediately below.

However, we 'camiot avoid a larger, legitimate concern emphasized in' the SEC’s amicus brief over applying Section 13(d) literally in the context of standard lock-up agreements. As the brief notes, á lock-up agreement is common, Brief of the SEC as Amicus Curiae, at 19 (citing NYSE/NASD IPO Advisory Comm., Report '& Recommendations of a committee convened ■ by the NYSE, Inc, & NASD at the request of the U.S. Securities and Exchange Commission (May 2003), at p.16, available at http:// www.fínra.org/sites/default/fíles/Industry/p 010373.pdf), even essential, to the typical IPO, and some other public offerings as well, id. at 19-22. Such an agreement assures potential buyers of securities in the IPO “that shares owned [by pre-IPO shareholders of the issuer will not] enter the public market too soon after the offering.” Initial Public Offerings: Lockup Agreements, Fast Answers, U.S. Securities & Exchange. Commission, available at http://www.sec.gov/answers/lockup.htm; ■ ■ (last visited Oct. 17, 2016); see also In re Facebook, Inc., 986 F.Supp.2d at 553. These assurances lead investors reasonably to expect an orderly market free of the danger of large sales of pre-owned shares depressing the share price before the pricing of the newly offered shares has settled in the market.

Applying Section 16(b) to underwriters engaged in lock-up agreements as facilitators of a public offering would impair the market for public offerings by complicating the role of underwriters—adding tens of millions of dollars in legal exposure to the underwriters’ costs. As parties to lockup agreements, the underwriters are not acting as investors seeking to buy low and set high. Rather, they are conduits for the distribution of securities in an offering to the public in which their participation begins and ends with the offering. A central role of the standard lock-up agreement is to limit the investment decisions of large shareholders in order to bring about an orderly, and successful, offering.

Public offerings are heavily regulated. See, e.g., In re Public Offering Fee Antitrust Litig., 98-cv-7890 (LLM), 2003 WL 21496795, at *2 (S.D.N.Y. June 27, 2003); David A. Westenberg, Initial Public Offerings: A Practical Guide to Going Public, § 18:12 (1st ed. 2011). Among the most heavily regulated are IPOs. See Adoption of Integrated Disclosure System, Securities Act Release No. 33-6383, 47 Fed. Reg. 11380 (Mar. 16, 1982). Disclosure to the public of relevant facts is extensive and, in this ease, included all of the pertinent facts asserted in the complaint. IPOs contemplate the sharing of confidential financial information vrith underwriters, agreements between underwriters and large pre-IPO shareholders' limiting disposal of their shares, and trading by underwriters in the course of the offering. Far from being nefarious, these actions benefit existing shareholders and new public investors. For example, one purpose of the regulation of public offerings is to enhance relatively accurate pricing of the offering’s shares by disclosure before sales of an offering to the public are allowed. See 15 U.S.C. § 77h. Achieving that purpose requires assurances of control over the disposition of blocs of shares owned by large pre-IPO investors, and lock-up agreements provide that control. (One effect of a lock-up agreement in an IPO is to prevent pre-IPO insiders from using nonpublic information to trade in a nascent public market.) The purpose also requires stabilization efforts by underwriters, as discussed above. Lockup agreements are, therefore, essential to the regulation of public offerings.

As amicus, the SEC advises us that ordinary lock-up agreements do not implicate the purposes of Section 13(d) and its definition of a “group.” Section 13(d) is intended to alert investors about possible changes in control and provide information about possible parties to those changes. See, e.g., Brief of the SEC, Amicus Curiae, Morales v. Quintel Entm’t, Inc., 249 F.3d 115 (2d Cir. 2001), at 20-21 (“There is no doubt that the purpose of Section 13(d) is to require disclosure of information by persons who have' acquired a substantial interest, or increased their interest in equity securities of a company by a substantial amount ... so that investors might assess the potential for changes in corporate control and adequately evaluate the company’s worth.”) (internal quotation marks omitted). To that end, the beneficial ownership rule seeks to “prevent a group of persons who seek to pool their voting or other interests ... from evading” Section 13(d)’s disclosure requirements. Wellman, 682 F.2d at 366 (quoting S. Rep. No. 550, 90th Cong., 1st Sess. 8 (1967)).

While appellant is correct that both -the Underwriters and Shareholders hoped to profit from the IPO—the Underwriters profiting according to the underwriting agreement and the Shareholders profiting from a newly established public market for them shares—this common objective creates no need for information about potential changes in control beyond that inherent in a public offering. Using Section 13(d) to create a “group” subject to Section 16(b) would impose large damages on transitory conduits of a public offering of shares. This imposition of damages would have nothing to do with the allaying of concerns about changes in control but would greatly raise the costs, and reduce the number, of IPOs.

To be sure, our analysis applies only to standard lock-up agreements like those at issue here. As the SEC’s amicus brief states, “[ajtypical language in the lock-up agreement, or other facts and circumstances outside of the lock-up agreement,” may trigger a Section 13(d) “group” finding. Brief of the SEC as Amicus Curiae, at 22. Our cases, discussed supra, have clearly indicated that coordination between underwriters and the other parties to a lockup agreement with implications for control changes beyond those inherent in an IPO might trigger such a finding. But no facts alleged in this matter, in the petition for reconsideration in the district court, or in the -request to amend persuade us that such a trigger exists.

We, therefore, affirm.

      . We may consider Facebook’s Registration Statement and Prospectus as documents integral to the complaint. See Chambers, 282 F.3d at 152-53; see also San Leandro Emergency Med. Grp. Profit Sharing Plan v. Philip Morris Cos., Inc., 75 F.3d 801, 808-09 (2d Cir. 1996).

      . Facebook’s Registration Statement disclosed that "the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the Class A common stock.” J. App’x at 43. This gave leeway to the IPO underwriters by' allowing them to "sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position” that they could cover by exercising a Green Shoe option or “by purchasing shares in the open market.” Such open-market purchases "may raise or maintain the market price of the Class A common stock above independent market levels or prevent or-retard a decline in the market price of the common stock.”

      . Because this appeal raises only a claim under Section 16, which imposes a strict-liability rule, as discussed infra, the adequacy of disclosure and the misuse of material, nonpublic information are not before us.

      . The Facebook IPO has spawned multiple lawsuits that have been consolidated in the district court. See In re Facebook, Inc., IPO Sec. & Derivative Litig., 922 F.Supp.2d 475, 477 (S.D.N.Y. 2013). Only the Section 16 issues are before us.

      .With regard to the Rule 16a-7 issue, the court stated, "Whether, if beneficial owners, the Lead Underwriters would be exempt from Section 16 liability under Rule 16a-7 presents certain complex and unprecedented issues, for instance, whether Defendants’ creation of informational disparities accompanied by unusually high levels of short selling, though compliant with the letter of the law, may still be ‘indecent’ or ‘dishonest’ for purposes of determining ‘good faith.’ The Court declines to reach these issues at this time, because even if the Lead Underwriters are not exempt under the statute, they lack the prerequisite ‘beneficial owner' status for Section 16 to apply." In re Facebook, Inc., 986 F.Supp. at 554 (internal citations omitted). In view of our disposition of this matter, we also do not address this Rule 16a-7 issue.

      . Section 16(b), long recognized by this court as a “crude,” “arbitrary,” and "Draconian” mechanism for curbing insider trading, see Blau v. Lamb, 363 F.2d 507, 515 (2d Cir. 1966), is especially so with respect to calculating the amount of "profit realized” from short-swing trading, see Smolowe v. Delendo Corp., 136 F.2d 231, 239 (2d Cir. 1943) (setting forth the general procedure for calculating disgorgement under Section 16(b)). Under the established method of calculating dis-gorgeable "profit” for Section 16(b) purposes, an individual may be charged with a Section 16(b) "profit” even when his or her relevant trading actually resulted in a substantial fi-nanciál loss. See Feder v. Frost, 220 F.3d 29, 32 (2d Cir. 2000); Adler v. Klawans, 267 F.2d 840, 847-48 (2d Cir. 1959). For example, imagine a statutory insider who purchases 100 shares at $100 per share on January 1, sells 100 shares at $50 per share on February 1, purchases 100 shares at $150 per share on March T, and sells 100 shares for $125 per share on April 1. This trader has lost $7,500 in real terms, but he has a profit of $2,500 for Section 16(b) purposes. See Smolowe, 136 F.2d at 239.

      . Appellant also advances an argument based on the fact that Goldman subsidiaries owned some pre-IPO Facebook shares. The substance of appellant's argument is rendered rather murky by issues related to how it was raised in the district court. Goldman’s subsidiaries’ ownership of pre-IPO Facebook shares was disclosed in the documents filed with the SEC that accompanied the IPO and its underwriting. J. App'x at 106. These documents were before the district court on the motion to dismiss, but appellant raised the stock ownership issues as relevant only in its motion for reconsideration in the district court. It comes before us as a claim of error by that court either in its decision on the merits or in the court’s declining to allow the complaint to be amended. We hold that these allegations do not render the lock-up agreements here as atypical in a way pertinent to our refusal to apply Section 13(d). No facts that might be alleged by plaintiff suggest, whether the lockup agreements covered the Goldman shares or not, any implications regarding control changes as contemplated by Section 13(d) as is fully explained in the text.