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SEC Rule 10b-5, codified at 17 CFR 240.10b-5, is one of the most important rules targeting securities fraud in the United States. It was promulgated by the U.S. Securities and Exchange Commission (SEC), pursuant to its authority granted under § 10(b) of the Securities Exchange Act of 1934 . [ 1 ]
The majority of securities fraud claims are brought pursuant to Section 10(b) of the Exchange Act (codified at 15 U.S.C. § 78j), as well as pursuant to SEC Rule 10b-5, which the SEC promulgated under the authority granted to it by Congress under the Exchange Act. Federal securities fraud actions will be referred to as "Rule 10b-5 actions" or ...
Interpretations under rule 10b-5 often deem silence to be fraudulent in certain circumstances. Efforts to comply with Rule 10b-5 and avoid lawsuits under 10b-5 have been responsible for a large amount of corporate disclosure. Due to the frequent use of the 10b-5 rule, codification becomes both efficient and necessary. [11]
SEC v. Texas Gulf Sulphur Co. [1] is a case from the United States Court of Appeals for the Second Circuit which articulated standards for a number of aspects of insider trading law under Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5.
Fraud on the market theory applies to civil enforcement of SEC Rule 10b-5 which "prohibits any act or omission resulting in fraud or deceit in connection with the purchase or sale of any security". The use of this theory was established in Basic and affirmed in Halliburton. [2]
SEC Rule 10b5-1, codified at 17 CFR 240.10b5-1, is a regulation enacted by the United States Securities and Exchange Commission (SEC) in 2000. [1] The SEC states that Rule 10b5-1 was enacted in order to resolve an unsettled issue over the definition of insider trading , [ 2 ] which is prohibited by SEC Rule 10b-5 .
In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 547 U.S. 71 (2006), the U.S. Supreme Court ruled that SLUSA operated to preempt state law "holder" claims, which alleged injury based on the prolonged retention of stock due to fraud, as well as claims arising from the fraud-induced purchase or sale of securities. Though SEC Rule 10b-5 ...
Securities Exchange Act of 1934, SEC Rule 10b-5 Basic Inc. v. Levinson , 485 U.S. 224 (1988), was a case in which the Supreme Court of the United States articulated the " fraud-on-the-market theory " as giving rise to a rebuttable presumption of reliance in securities fraud cases.