Research Handbook on Securities Regulation in the United States

Research Handbook on Securities Regulation in the United States

Research Handbooks in Financial Law series

Edited by Jerry Markham and Rigers Gjyshi

This fascinating Handbook provides a clear explanation of the securities market regulation regime in the United States. A diverse set of contributors offer a comprehensive overview of the regulatory process, Dodd-Frank, the principal securities statutes, and the regulators and market participants involved. In addition to a general summary of the topic, this volume provides detailed explanations of the process for registering securities, exemptions from registration, secondary distributions, and the underwriting process. Scholars and students of financial law, banking and regulatory law will find this book a useful resource, as will attorneys, compliance professionals, risk-mitigation professionals and corporate leaders.

Chapter 13: Fraud, manipulation and other prohibited practices

Jerry W. Markham

Subjects: economics and finance, financial economics and regulation, law - academic, finance and banking law

Extract

The federal securities laws seek to prohibit fraud manipulation and other abuses associated with securities transactions. The most prominent of these prohibitions is found in Section 10(b) of the Securities Exchange Act of 1934 (the “34 Act”) and Rule 10b-5 promulgated thereunder by the Securities Exchange Commission (“SEC”). There are, however, additional anti-fraud provisions in others of the so-called federal securities laws, including the Securities Act 1933 (the “33 Act”) and the Investment Advisers Act of 1940 (the “1940 Act”). This chapter will focus principally upon Section 10(b) of the 34 Act, but it will also more briefly describe the anti-fraud provisions in the 33 and 1940 Acts. Section 10(b) of the 34 Act states that: 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— .… (b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, or any securities-based swap agreement any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

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