SEC Rule 10b-5

Prohibiting Securities Fraud

The Securities Exchange Act of 1934 granted the Securities and Exchange Commission (SEC) broad authority to make rules aimed to eliminate fraud in the trade of securities. One of the rules that the SEC enacted is Rule 10b-5, which prohibits fraud, misrepresentation, and deceit in the sale and purchase of securities.

Language of SEC Rule 10b-5

“It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,

  1. To employ any device, scheme, or artifice to defraud,
  2. To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
  3. To engage in any act, practice, or course of business which
    operates or would operate as a fraud or deceit upon any person, in
    connection with the purchase or sale of any security.”

Enforcement for Violations of SEC Rule 10b-5

In addition to the SEC’s enforcement rights, private citizens also have the right to file lawsuits against companies and individuals for violations of Rule 10b-5. Typically, Rule 10b-5 claims are applied in lawsuits involving:

Report a Violation of SEC Rule 10b-5

Speak with one of our securities attorneys by calling (866) 981-4800 or by filling out the form to the right.

SEC Whistleblowers

Girard Gibbs encourages persons who know about possible securities violation to contact the firm. Under the SEC whistleblower laws promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act, whistleblowers may be receive a reward of up to 30 percent of the recovery for information leading to a successful enforcement action by the SEC and are protected from employer retaliation. If you believe that you have information about a securities violation, please contact us at 866.981 4800 or by filling out the form at the right.

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