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Securities Litigation and Enforcement: Section 10b

This guide presents an overview of securities litigation and enforcement including class actions, insider trading and resources for current topics

Overview

CITATIONS
 
Section 10(b) of the Securities Exchange Act of 1934 = 15 U.S.C. § 78(j)(b)
 
Rule 10b-5 = 17 C.F.R. § 240.10b-5 

Treatises

The Statute

15 U.S.C.A. § 78j 
 
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--
(a)
(1) To effect a short sale, or to use or employ any stop-loss order in connection with the purchase or sale, of any security other than a government security, 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.
(2) Paragraph (1) of this subsection shall not apply to security futures products.
 
(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.

The Regulation

17 C.F.R. § 240.10b-5
 
§ 240.10b–5 Employment of manipulative and deceptive devices.
 
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,
(a) To employ any device, scheme, or artifice to defraud,
(b) 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
(c) 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.
 
(Authority: Sec. 10; 48 Stat. 891; 15 U.S.C. 78j)

Journal Articles

1. FRAUD CREATED THE MARKET: AN UNWISE AND UNWARRANTED EXTENSION OF SECTION 10(B) AND RULE 10B-5, George Washington Law Review March 1995 63 Geo. Wash. L. Rev. 359 Julie A. Herzog

2. SECURITIES FRAUD UNDER SECTION 10(b) AND RULE 10b-5: SCIENTER, RECKLESSNESS, AND THE GOOD FAITH DEFENSE, Journal of Corporation Law Winter, 1986 11 J. Corp. L. 179 Paul S. Milich

3. TRIGGERING ONE-YEAR LIMITATIONS ON SECTION 10(B) AND RULE 10B-5 ACTIONS: ACTUAL OR INQUIRY DISCOVERY?, San Diego Law Review Fall 1993 30 San Diego L. Rev. 917 Charles Benjamin Nutley

4. REASSESSING THE SCOPE OF CONDUCT PROHIBITED BY SECTION 10(B) AND THE ELEMENTS OF RULE 10B-5: REFLECTIONS ON SECURITIES FRAUD AND SECONDARY ACTORS, Catholic University Law Review Spring, 2004 53 Cath. U. L. Rev. 667 Andrew S. Gold

5. STANDING UNDER SECTION 10(B) AND RULE 10B-5: THE CONTINUED VALIDITY OF THE FORCED SELLER EXCEPTION TO THE PURCHASER-SELLER REQUIREMENT, University of Pennsylvania Journal of Business Law Summer 2009 11 U. Pa. J. Bus. L. 843 Eric C. Chaffee

6. THE AFTERMATH OF CENTRAL BANK OF DENVER: PRIVATE AIDING AND ABETTING LIABILITY UNDER SECTION 10(B) AND RULE 10B-5, American University Law Review June 1995 44 Am. U. L. Rev. 1817 David J. Baum

7. BEYOND BLUE CHIP: ISSUER STANDING TO SEEK INJUNCTIVE RELIEF UNDER SECTION 10(B) AND RULE 10B-5 WITHOUT THE PURCHASE OR SALE OF A SECURITY, Seton Hall Law Review 2006 36 Seton Hall L. Rev. 1135 Eric C. Chaffee

8. THE MEASURE OF DAMAGES UNDER SECTION 10(b) AND RULE 10b-5, Maryland Law Review Summer, 1987 46 Md. L. Rev. 1266 Ronald B. Lee

9. JUDICIAL IMPLICATION OF CONTRIBUTION UNDER SECTION 10(b) OF THE SECURITIES EXCHANGE ACT: IS THE NEW BRANCH ON THE JUDICIAL OAK THREATENED BY STRICT STATUTORY CONSTRUCTION?, Suffolk University Law Review Winter, 1982 16 Suffolk U. L. Rev. 983 James Shaw O’Shaughnessy

10. CENTRAL BANK OF DENVER V. FIRST INTERSTATE BANK OF DENVER: THE SUPREME COURT CHOPS A BOUGH FROM THE JUDICIAL OAK: THERE IS NO IMPLIED PRIVATE REMEDY TO SUE FOR AIDING AND ABETTING UNDER SECTION 10(B) AND SEC RULE 10B-5, New England Law Review Winter 1996 30 New Eng. L. Rev. 475 Scott M. Murray

11. YET ANOTHER BOUGH ON THE “JUDICIAL OAK” : THE SECOND CIRCUIT CLARIFIES INQUIRY NOTICE AND ITS LOSS CAUSATION REQUIREMENT UNDER THE PSLRA IN LENTELL V. MERRILL LYNCH & CO., Saint John’s Law Review Spring 2005 79 St. John’s L. Rev. 485 Devin F. Ryan

12. UNITED STATES V. O’HAGAN: THE MISAPPROPRIATION THEORY UNDER SECTION 10(B) AND RULE 10B-5--CAN THE JUDICIAL OAK GROW ANY HIGHER?, Dickinson Law Review Winter 1998 102 Dick. L. Rev. 277 J. Dormer Stephen III

13. STONERIDGE V. SCIENTIFIC-ATLANTA: DO SECTION 10(B) AND RULE 10B-5 REQUIRE A MISSTATEMENT OR OMISSION?, Quinnipiac Law Review 2008 26 Quinnipiac L. Rev. 839 Rodney D. Chrisman

14. SEC CIVIL REMEDIES FOR INSIDER TRADING ACTIONS UNDER SECTION 10(b) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10b-5, University of Cincinnati Law Review 1988 57 U. Cin. L. Rev. 679 Katherine H. Brown

15. EXTRATERRITORIAL JURISDICTION AND U.S. SECURITIES LAW: SEEKING LIMITS FOR APPLICATION OF THE 10(B) AND 10B-5 ANTIFRAUD PROVISIONS, Kentucky Law Journal 2003-2004 92 Ky. L.J. 1051 Brandy L. Fulkerson

16. SECTION 10(b) AND RULE 10b-5 FEDERAL SECURITIES LAW CLAIMS: THE NEED FOR THE UNIFORM DISPOSITION OF THE ARBITRATION ISSUE, San Diego Law Review January/February, 1987 24 San Diego L. Rev. 199 Audrey V. Nelson

17. ACCOUNTABILITY OF THE INDEPENDENT ACCOUNTANT AS AUDITOR IN THE WAKE OF CENTRAL BANK: DOES THE IMPLIED PRIVATE RIGHT OF ACTION SURVIVE UNDER SECTION 10(B) AND RULE 10B-5?, Suffolk University Law Review 1998 31 Suffolk U. L. Rev. 873 Francine A. Ritter

18. THE MISAPPROPRIATION THEORY: RULE 10b-5 INSIDER LIABILITY FOR NONFIDUCIARY BREACH, Fordham Urban Law Journal 1986/1987 15 Fordham Urb. L.J. 1049 Elliot Brecher

19. OBTAINING UNIFORMITY FOR SECTION 10(B) AND RULE 10B-5 CAUSES OF ACTION, Connecticut Law Review Spring, 1990 22 Conn. L. Rev. 525 Denise Rodosevich

20. INVESTOR PROTECTION AFTER McMAHON; THE ARBITRABILITY OF CLAIMS ARISING UNDER SECTION 10(b) OF THE SECURITIES EXCHANGE ACT OF 1934 AND SEC RULE 10b-5, Delaware Journal of Corporate Law 1988 13 Del. J. Corp. L. 537 Cristy B. Bell

21. APPORTIONING CONTRIBUTION IN SECTION 10(B) AND RULE 10B-5 MULTI-DEFENDANT SUITS: A CRITIQUE OF RELATIVE CULPABILITY SHARES IN THE WAKE OF SMITH v. MULVANEY, Brigham Young University Law Review 1988 1988 B.Y.U. L. Rev. 409 Adam S. Affleck

22. SECURITIES -- FRAUD -- PRIVATE PLAINTIFFS MAY NOT MAINTAIN AIDING AND ABETTING SUITS UNDER SECURITIES EXCHANGE ACT SECTION 10(B) AND SECURITIES AND EXCHANGE COMMISSION RULE 10B-5., Saint Mary’s Law Journal 1995 26 St. Mary’s L.J. 601 Ginger E. Margolin

23. IMPLYING A RIGHT OF CONTRIBUTION UNDER SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5: THE SUPREME COURT FINDS POWER WHERE NONE EXISTS, Boston College Law Review December, 1993 35 B.C. L. Rev. 175 Christopher R. Stone

24. SECURITIES LAW—THE SECURITIES EXCHANGE ACT OF 1934— ‘ROUND AND ‘ROUND WE GO: THE SUPREME COURT AGAIN LIMITS THE CIRCUMSTANCES IN WHICH FEDERAL COURTS MAY HOLD SECONDARY ACTORS LIABLE UNDER SECTION 10(B) AND SEC RULE 10B-5. STONERIDGE INVESTMENT PARTNERS, LLC v. SCIENTIFIC-ATLANTA, INC., 128 S. CT. 761 (2008)., University of Arkansas at Little Rock Law Review Fall, 2008 31 U. Ark. Little Rock L. Rev. 197 W. Taylor Marshall

25. SECURITIES REGULATION--FRAUD--SCIENTER MUST BE ESTABLISHED FOR THE SEC TO OBTAIN INJUNCTIVE RELIEF FOR VIOLATIONS OF SECTION 17(A) OF THE SECURITIES ACT OF 1933, AND SECTION 10(b) AND RULE 10b-5 OF THE SECURITIES EXCHANGE ACT OF 1934, Saint Mary’s Law Journal 1981 12 St. Mary’s L.J. 754 Laura L. Worsham

26. RIGHTS AMONG WRONGDOERS: SEC ENFORCEMENT ACTIONS AND THE RIGHT TO CONTRIBUTION UNDER SECTION 10(B) AND RULE 10B-5, George Washington Law Review March 1995 63 Geo. Wash. L. Rev. 444 Nancy A. Smolensky

27. A FRAMEWORK FOR ANALYZING ATTORNEY LIABILITY UNDER SECTION 10(B) AND RULE 10B-5, University of New Hampshire Law Review October, 2012 10 U. N.H. L. Rev. 193 Gary M. Bishop

28. RECENT JUDICIAL AND STATUTORY CHANGES IMPACTING THE MAINTENANCE OF SECURITIES ACTIONS FILED UNDER SECTION 10(B) AND RULE 10B-5, University of Hawaii Law Review Fall, 1992 14 U. Haw. L. Rev. 581 Dana B. Taschner , Robin L. Filion

29. AN OAK IS AN OAK IS AN OAK IS AN OAK: THE DISAPPOINTING ENTRENCHMENT IN HALLIBURTON CO. V. ERICA P. JOHN FUND OF THE IMPLIED PRIVATE RIGHT OF ACTION UNDER SECTION 10(B) AND RULE 10B-5, NYU Journal of Law & Liberty 2015 9 N.Y.U. J. L. & Liberty 92 Eric C. Chaffee

30. SECURITIES EXCHANGE ACT—BREACH OF CORPORATE FIDUCIARY DUTY—THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT RULED THAT A COMPANY THAT ADOPTED A SHAREHOLDER’S RIGHT PLAN DID NOT VIOLATE SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OR RULE 10B-5, SINCE THE CORPORATE OFFICERS AND BOARD MEMBERS DID NOT OMIT FACTS OR MISINFORM THE PUBLIC AS TO ANY MATERIAL MATTER REGARDING THE PLAN, Duquesne Law Review Fall, 1992 31 Duq. L. Rev. 231 Holly McCann

31. SECONDARY LIABILITY UNDER SECTION 10(B) OF THE SECURITIES ACT OF 1934 AND RULE 10B-5 POST-STONERIDGE, Journal of Civil Rights & Economic Development Summer 2011 25 J. Civ. Rts. & Econ. Dev. 999 Robert Van De Veire

32. A CLAIM FOR VIOLATIONS OF § 10(B) OF THE SECURITIES EXCHANGE ACT AND SEC RULE 10B-5 REQUIRES A PLAINTIFF TO PROVE THAT THE DEFENDANT’S REPRESENTATION OR OMISSION MATERIALLY AFFECTED THE “TOTAL MIX” OF INFORMATION MADE AVAILABLE TO A REASONABLE INVESTOR. MATRIXX INITIATIVES, INC. v. SIRACUSANO, 131 S. CT. 1309 (2011)., Transactions: The Tennessee Journal of Business Law Fall, 2011 13 Transactions: Tenn. J. Bus. L. 193 Taylor Wirth

33. A PRIVATE RIGHT OF ACTION EXISTS FOR VIOLATIONS OF § 10(B) OF AND RULE 10B-5 UNDER THE SECURITIES EXCHANGE ACT WHERE A PLAINTIFF CAN ESTABLISH A MATERIAL MISREPRESENTATION BY THE DEFENDANT, SCIENTER, A RELATIONSHIP BETWEEN THE MISREPRESENTATION AND THE PURCHASE OR SALE OF A SECURITY, RELIANCE UPON THE MISREPRESENTATION, ECONOMIC LOSS, AND LOSS CAUSATION. IND. STATE DIST. COUNCIL OF LABORERS v. OMNICARE, INC., 583 F.3D 935 (6TH CIR. 2009), Transactions: the Tennessee Journal of Business Law Spring, 2010 11 Transactions: Tenn. J. Bus. L. 256 Andrew Sumner

34. FEDERAL CIVIL PROCEDURE--STANDING--ABSENT INJURY WITHIN THE ZONE OF PROTECTION ESTABLISHED UNDER SECTION 10(B) AND RULE 10B-5, STANDING TO ASSERT A CAUSE OF ACTION IS DENIED, REGARDLESS OF THE RELIEF SOUGHT--TRUMP HOTELS & CASINO RESORTS, INC. V. MIRAGE RESORTS INC., 140 F.3 478 (3 CIR. 1998)., Seton Hall Law Review 1998 29 Seton Hall L. Rev. 369 Robert S. Bournias

35. SECURITIES LAW--SHORT v. BELLEVILLE SHOE MANUFACTURING CO.: A SHORT PROPOSAL FOR THE ADOPTION OF A UNIFORM FEDERAL LIMITATIONS PERIOD FOR SECTION 10(B) AND RULE 10B-5, Memphis State University Law Review Fall, 1990 21 Mem. St. U. L. Rev. 147 Christopher G. Lazarini

36. A MAVERICK ACHIEVES SOMETHING NOBLER THAN SIMPLE REBELLION: WHY SHARESLEUTH IS LEGAL UNDER SECTION 10(B) AND RULE 10B-5, AND WHY IT SHOULD REMAIN THAT WAY, Northwestern University Law Review Winter 2009 103 Nw. U. L. Rev. 335 Matthew B. Arnould

37. GREENHOUSE V. MCG CAPITAL CORP. : IS A SENIOR MANAGER’S EDUCATIONAL BACKGROUND MATERIAL UNDER FEDERAL SECURITIES LAW?, Thomas M. Cooley Journal of Practical and Clinical Law Trinity Term 2006 8 T.M. Cooley J. Prac. & Clinical L. 229 Gregory M. Matlock