How to Read SEC Rule 10b-5 (Securities Law Series) Kindle

THIS CASEBOOK contains a selection of 224 U. S. Court of Appeals decisions that analyze and discuss issues stemming from Securities and Exchange Commission Rule 10b-5.The selection of decisions spans from 2004 to the date of publication.Section 10(b) is the 1934 Act's "primary antifraud provision[]" and is another "key weapon[] in the statutory arsenal for securing market integrity and investor confidence." Aaron, 446 U.S. at 704, 100 S.Ct. 1945 (Blackmun, J., concurring in part and dissenting in part). Section 10(b) provides:It shall be unlawful for any person ... by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange ... [t]o 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 ... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe as necessary or appropriate in the public interest or for the protection of investors.15 U.S.C. § 78j (emphasis added). In Re Kingate Management Ltd. Litigation, 784 F. 3d 128 (2nd Cir. 2015).SEC Rule 10b-5, promulgated in 1942 pursuant to § 10(b), provides:It shall be unlawful for any person ... (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.17 C.F.R. § 240.10b-5 (emphasis added). [Footnote omitted.] In Re Kingate Management Ltd. Litigation, ibid.The decades following the promulgation of these provisions saw extensive private litigation, primarily under § 10(b) and Rule 10b-5, against defendants alleged to have committed frauds in connection with purchases and sales of securities, including class actions brought on behalf of large groups of purchasers of securities against issuers, underwriters, and related persons. In Re Kingate Management Ltd. Litigation, ibid.Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and SEC Rule 10b-5, 17 C.F.R. § 240.10b-5, "prohibit fraudulent conduct in the sale and purchase of securities." Ferris, Baker Watts, Inc. v. Ernst & Young, LLP, 395 F.3d 851, 853 (8th Cir. 2005). To successfully state a claim for a securities fraud action under Section 10(b) and Rule10b-5, a plaintiff must establish six elements: (1) a material misrepresentation or omission, (2) scienter, (3) a connection to the purchase or sale of a security, (4) reliance, (5) economic loss, and (6) loss causation. Horizon Asset Mgmt. Inc. v. H & R Block, Inc., 580 F.3d 755, 760 (8th Cir. 2009). The PSLRA contains a safe-harbor provision, which protects defendants from liability when: (1) they have made forward-looking statements accompanied by meaningful cautionary language, (2) the forward-looking statement is immaterial, or (3) the statement is made without actual knowledge that it was false or misleading. 15 U.S.C. § 78u-5(c)(1). Julianello v. KV Pharmaceutical Company, (8th Cir. 2015).* * *