15 U.S.C. § 80b–6 — Prohibited transactions by investment advisers

submitted 86 years ago by ch. 686 to r/title-15-COMMERCE-AND-TRADE · 230 words · no verdicts yet

in plain englishAI-generated · not legal advice

This section bans investment advisers from defrauding their clients. Advisers can't buy or sell securities with a client without written disclosure and consent. The SEC also bans, and can define by rule, any fraudulent or manipulative act.

Using the mail or any means of interstate commerce, it is illegal for an investment adviser, directly or indirectly, to: (1) use any device, scheme, or trick to defraud a client or prospective client; (2) engage in any transaction, practice, or course of business that operates as a fraud or deceit on a client or prospective client; (3) — while acting as principal for its own account — knowingly buy or sell a security to or from a client, or — while acting as broker for someone else — knowingly arrange a sale or purchase for that client's account, without first disclosing to the client in writing which role it is playing and getting the client's consent before the transaction is complete (this rule does not apply to a broker's or dealer's customer transaction if that broker or dealer isn't acting as an investment adviser in it); or (4) engage in any fraudulent, deceptive, or manipulative act, practice, or course of business. For (4), the SEC must define by rule what counts as fraudulent, deceptive, or manipulative, and must set rules reasonably designed to prevent it.

the actual law source: uscode.house.gov ↗public domain

It shall be unlawful for any investment adviser by use of the mails or any means or instrumentality of interstate commerce, directly or indirectly—

(1)

to employ any device, scheme, or artifice to defraud any client or prospective client;

(2)

to engage in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client;

(3)

acting as principal for his own account, knowingly to sell any security to or purchase any security from a client, or acting as broker for a person other than such client, knowingly to effect any sale or purchase of any security for the account of such client, without disclosing to such client in writing before the completion of such transaction the capacity in which he is acting and obtaining the consent of the client to such transaction. The prohibitions of this paragraph shall not apply to any transaction with a customer of a broker or dealer if such broker or dealer is not acting as an investment adviser in relation to such transaction; or

(4)

to engage in any act, practice, or course of business which is fraudulent, deceptive, or manipulative. The Commission shall, for the purposes of this paragraph (4) by rules and regulations define, and prescribe means reasonably designed to prevent, such acts, practices, and courses of business as are fraudulent, deceptive, or manipulative.

Source credit: (Aug. 22, 1940, ch. 686, title II, § 206, 54 Stat. 852; Pub. L. 86–750, §§ 8, 9, Sept. 13, 1960, 74 Stat. 887; Pub. L. 111–203, title IX, § 985(e)(2), July 21, 2010, 124 Stat. 1935.)

history & why it existsrecord from the source credit

1940Enacted · Act of Aug. 22, 1940, ch. 686 · 54 Stat. 852
1960Amended · Pub. L. 86-750 · 74 Stat. 887
2010Amended · Pub. L. 111-203 · 124 Stat. 1935

A history note hasn’t been published yet. The record shows enactment by ch. 686 on 1940-08-22.

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