It shall be unlawful for any
registered broker or dealer, member of a national securities exchange, or broker
or dealer who transacts a business in securities through the medium
of any member of a national securities exchange, directly or indirectly—
(a) In contravention of such rules and regulations
as the Commission shall prescribe for the protection of investors
to hypothecate or arrange for the hypothecation of any securities
carried for the account of any customer under circumstances (1) that
will permit the commingling of his securities without his written
consent with the securities of any other customer, (2) that will permit
such securities to be commingled with the securities of any person
other than a bona fide customer, or (3) that will permit such securities
to be hypothecated, or subjected to any lien or claim of the pledgee,
for a sum in excess of the aggregate indebtedness of such customers
in respect of such securities.
(b) To lend or
arrange for the lending of any securities carried for the account
of any customer without the written consent of such customer or in
contravention of such rules and regulations as the Commission shall
prescribe for the protection of investors.
[15 USC 78h. As amended
by acts of June 4, 1975 (89 Stat. 109); Oct. 3, 1984 (98 Stat. 1690);
Sept. 23, 1994 (108 Stat. 2199); and Oct. 11, 1996 (110 Stat. 3423).]
