An Introduction to United States Securities and Exchange Commission Rule 10b-5

Abstract:     
This article is based on a talk at Nihon University College of Law in Tokyo. The piece covers six of the universal requirements for a defendant’s Rule 10b-5 criminal or civil liability: (1) use of an instrumentality of interstate commerce, (2) definition of security, (3) materiality, (4) fraud (or manipulation), (5) “in connection with” a purchase or sale of any security, and (6) scienter. The article also covers several other aspects of Rule 10b-5: (1) aiding and abetting civil liability, (2) permissible overlap with more specific provisions and rules, (3) an affirmative corporate duty to disclose material developments?, and (4) some requirements for a private Rule 10b-5 cause of action.

Keywords: Rule 10b-5, Section 10(b), Securities and Exchange Commission, SEC, Securities Fraud

JEL Classification: G38, K22

Accepted Paper Series