(a) Transactions relating to purchase or sale of security. It shall
be unlawful for any person, directly or indirectly, by the use of
the mails or any means or instrumentality of interstate commerce,
or of any facility of any national securities exchange, or for any
member of a national securities exchange—
(1) For the purpose of creating a false
or misleading appearance of active trading in any security other than
a government security, or a false or misleading appearance with respect
to the market for any such security, (A) to effect any transaction
in such security which involves no change in the beneficial ownership
thereof, or (B) to enter an order or orders for the purchase of such
security with the knowledge that an order or orders of substantially
the same size, at substantially the same time, and at substantially
the same price, for the sale of any such security, has been or will
be entered by or for the same or different parties, or (C) to enter
any order or orders for the sale of any such security with the knowledge
that an order or orders of substantially the same size, at substantially
the same time, and at substantially the same price, for the purchase
of such security, has been or will be entered by or for the same or
different parties.
(2)
To effect, alone or with 1 or more other persons, a series of transactions
in any security other than a government security, any security not
so registered, or in connection with any security-based swap or security-based
swap agreement with respect to such security creating actual or apparent
active trading in such security, or raising or depressing the price
of such security, for the purpose of inducing the purchase or sale
of such security by others.
(3) If a dealer, broker, security-based
swap dealer, major security-based swap participant, or other person
selling or offering for sale or purchasing or offering to purchase
the security, a security-based swap, or a security-based swap agreement
with respect to such security, to induce the purchase or sale of any
security other than a government security, any security not so registered,
any security-based swap, or any security-based swap agreement with
respect to such security by the circulation or dissemination in the
ordinary course of business of information to the effect that the
price of any such security will or is likely to rise or fall because
of market operations of any 1 or more persons conducted for the purpose
of raising or depressing the price of such security.
(4) If a dealer, broker, security-based
swap dealer, major security-based swap participant, or other person
selling or offering for sale or purchasing or offering to purchase the security,
a security-based swap, or security-based swap agreement with respect
to such security, to make, regarding any security other than a government
security, any security not so registered, any security-based swap,
or any security-based swap agreement with respect to such security,
for the purpose of inducing the purchase or sale of such security,
such security-based swap, or such security-based swap agreement any
statement which was at the time and in the light of the circumstances
under which it was made, false or misleading with respect to any material
fact, and which that person knew or had reasonable ground to believe
was so false or misleading.
(5) For a consideration, received directly
or indirectly from a broker, dealer, security-based swap dealer, major
security-based swap participant, or other person selling or offering
for sale or purchasing or offering to purchase the security, a security-based
swap, or security-based swap agreement with respect to such security,
to induce the purchase of any security other than a government security,
any security not so registered, any security-based swap, or any security-based
swap agreement with respect to such security by the circulation or
dissemination of information to the effect that the price of any such
security will or is likely to rise or fall because of the market operations
of any 1 or more persons conducted for the purpose of raising or depressing
the price of such security.
(6) To effect either alone or with one
or more other persons any series of transactions for the purchase
and/or sale of any security other than a government security for the
purpose of pegging, fixing, or stabilizing the price of such 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.
5-058
(b) Transactions relating to puts, calls, straddles,
or options. It shall be unlawful for any person to effect, 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—
(1) any transaction in connection with
any security whereby any party to such transaction acquires—
(A) any
put, call, straddle, or other option or privilege of buying the security
from or selling the security to another without being bound to do
so;
(B) any security
futures product on the security; or
(C) any security-based swap involving
the security or the issuer of the security;
(2) any transaction in connection
with any security with relation to which such person has, directly
or indirectly, any interest in any—
(A) such put, call, straddle,
option, or privilege;
(B) such security futures product; or
(C) such security-based swap; or
(3) any transaction
in any security for the account of any person who such person has
reason to believe has, and who actually has, directly or indirectly,
any interest in any—
(A) such put, call, straddle, option,
or privilege;
(B)
such security futures product with relation to such security; or
(C) any security-based
swap involving such security or the issuer of such security.
5-059
(c) Endorsement or guarantee
of puts, calls, straddles, or options. It shall be unlawful for
any broker, dealer, or member of a national securities exchange directly
or indirectly to endorse or guarantee the performance of any put,
call, straddle, option, or privilege in relation to any 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.
(d) Transactions relating to short sales of securities. It shall be unlawful for any person, directly or indirectly, by the
use of the mails or any means or instrumentality of interstate commerce,
or of any facility of any national securities exchange, or for any
member of a national securities exchange to effect, alone or with
one or more other persons, a manipulative short sale of any security.
The Commission shall issue such other rules as are necessary or appropriate
to ensure that the appropriate enforcement options and remedies are
available for violations of this subsection in the public interest
or for the protection of investors.
(e) Registered warrant, right, or convertible security
not included in “put”, “call”, “straddle”, or “option”. The terms
“put”, “call”, “straddle”, “option”, or “privilege” as used in this
section shall not include any registered warrant, right, or convertible
security.
5-060
(f) Persons liable; suits
at law or in equity. Any person who willfully participates in
any act or transaction in violation of subsections (a), (b), or (c)
of this section, shall be liable to any person who shall purchase
or sell any security at a price which was affected by such act or
transaction, and the person so injured may sue in law or in equity
in any court of competent jurisdiction to recover the damages sustained
as a result of any such act or transaction. In any such suit the court,
may, in its discretion, require an undertaking for the payment of
the costs of such suit, and assess reasonable costs, including reasonable
attorneys’ fees, against either party litigant. Every person who becomes
liable to make any payment under this subsection may recover contribution
as in cases of contract from any person who, if joined in the original
suit, would have been liable to make the same payment. No action shall
be maintained to enforce any liability created under this section,
unless brought within one year after the discovery of the facts constituting
the violation and within three years after such violation.
(g) Section not applicable
to exempted securities. The provisions of subsection (a) shall
not apply to an exempted security.
(h) (1) Notwithstanding any other
provision of law, the Commission shall have the authority to regulate
the trading of any put, call, straddle, option, or privilege on any
security, certificate of deposit, or group or index of securities
(including any interest therein or based on the value thereof), or
any put, call, straddle, option, or privilege entered into on a national
securities exchange relating to foreign currency (but not, with respect
to any of the foregoing, an option on a contract for future delivery
other than a security futures product).
(2) Notwithstanding the Commodity Exchange
Act, the Commission shall have the authority to regulate the trading
of any security futures product to the extent provided in the securities
laws.
5-060.1
(i) Limitations
on practices that affect market volatility. It shall be unlawful
for any person, by the use of the mails or any means or instrumentality
of interstate commerce or of any facility of any national securities
exchange, to use or employ any act or practice in connection with
the purchase or sale of any equity security in contravention of such
rules or regulations as the Commission may adopt, consistent with
the public interest, the protection of investors, and the maintenance
of fair and orderly markets—
(1) to prescribe means reasonably designed
to prevent manipulation of price levels of the equity securities market
or a substantial segment thereof; and
(2) to prohibit or constrain, during periods
of extraordinary market volatility, any trading practice in connection
with the purchase or sale of equity securities that the Commission
determines (A) has previously contributed significantly to extraordinary
levels of volatility that have threatened the maintenance of fair
and orderly markets; and (B) is reasonably certain to engender such
levels of volatility if not prohibited or constrained.
In adopting rules under paragraph (2), the Commission
shall, consistent with the purposes of this subsection, minimize the impact
on the normal operations of the market and a natural person’s freedom
to buy or sell any equity security.
(j) The authority
of the Commission under this section with respect to security-based
swap agreements shall be subject to the restrictions and limitations
of section 3A(b) of this title.
(j)
* 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,
to effect any transaction in, or to induce or attempt to induce the
purchase or sale of, any security-based swap, in connection with which
such person engages in any fraudulent, deceptive, or manipulative
act or practice, makes any fictitious quotation, or engages in any
transaction, practice, or course of business which operates as a fraud
or deceit upon any person. The Commission shall, for the purposes
of this subsection, by rules and regulations define, and prescribe
means reasonably designed to prevent, such transactions, acts, practices,
and courses of business as are fraudulent, deceptive, or manipulative,
and such quotations as are fictitious.
[15 USC 78i. As amended
by acts of Oct. 13, 1982 (96 Stat. 1409); Oct. 16, 1990 (104 Stat.
975); Dec. 21, 2000 (114 Stat. 2763A-425, 426, 453, 454); and July
21, 2010 (124 Stat. 1760, 1777, 1861, 1870).]
