Securities Act of 1933: Section 5 - Prohibitions Relating to Interstate Commerce and the Mails


Sale or Delivery After Sale of Unregistered Securities
Unless a registration statement is in effect as to a security, it shall be unlawful for any person, directly or indirectly:

  • To make use of any means or instruments of transportation or communication in interstate commerce or of the mails to sell such security through the use or medium of any prospectus or otherwise; or

  • To carry or cause to be carried through the mails or in interstate commerce, by any means or instruments of transportation, any such security for the purpose of sale or for delivery after sale.

Necessity of Prospectus Meeting Requirements under Section 10
It shall be unlawful for any person, directly or indirectly:

  • To make use of any means or instruments of transportation or communication in interstate commerce or of the mails to carry or transmit any prospectus relating to any security with respect to which a registration statement has been filed under this title, unless such prospectus meets the requirements of section 10; or

  • To carry or cause to be carried through the mails or in interstate commerce any such security for the purpose of sale or for delivery after sale, unless accompanied or preceded by a prospectus that meets the requirements of section 10.

Securities Exchange Act of 1934: Section 10 - Regulation of the Use of Manipulative and Deceptive Devices

As mentioned in Section 5 of the Securities Exchange of 1933, the prospectus must also adhere to Section 10, which states the following:

The term "manipulative" or "deceptive device" is defined as any act or omission to act with respect to any security exempted from Section 12(a). This section is applicable to such security if such act or omission to act would have been unlawful under section 9(a) if done or omitted to be done with respect to a security registered on a national securities exchange, and the use of any means or instrumentality of interstate commerce or of the mails or of any facility of any national securities exchange to use or employ any such device or contrivance in connection with the purchase or sale of any such security is hereby prohibited.


Rule 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, of the mails or of any facility of any national securities exchange:

  • To employ any device, scheme, or artifice to defraud;

  • 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

  • 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.


Registration and Regulation of Brokers and Dealers

Related Articles
  1. Investing

    Interpreting A Company's IPO Prospectus Report

    Learn to decipher the secret language of the IPO prospectus report - it can tell you a lot about a company's future.
  2. Investing

    Digging Deeper: The Mutual Fund Prospectus

    The legal jargon of this document can be daunting. Find out how to get to the important stuff.
  3. Financial Advisor

    8 Ways Advisors Can Improve Direct Mail Marketing

    Here are eight ways advisors can improve their direct mail marketing efforts.
  4. Investing

    An Insight on the Prospectus of Corporate Bonds

    Making a well-informed decision with respect to buying a corporate bond involves reading the significant facts and details of the prospectus document.
  5. Insights

    Duck These Illegal Sales Tactics Used By Brokers

    Many unscrupulous brokers employ illegal swindling tactics to sell bad securities. Here are sales strategies that should indicate red flags to investors.
  6. Personal Finance

    6 Ways To Stop Credit Card Junk Mail

    Tired of credit card offers filling your mail box? Take advantage of these options to reduce the amount of credit card junk mail you receive.
  7. Investing

    SEC Filings: Forms You Need To Know

    The forms companies are required to file provide a clear view of their histories and progress.
  8. Investing

    Speed Read SEC Filings For Hot Stock Picks

    SEC forms can be a real headache. Find out how to make your research more efficient - and more effective.
  9. Insurance

    Section 125 Plan (Cafeteria Plan): How Does It Work?

    Learn about section 125 cafeteria plans, who is allowed to use one, how it works, the benefits it provides, and how to set one up.
  10. Personal Finance

    The Series 79 Exam: What It Is And When You Need It

    If you're getting into the field of investment banking, you'll need to know all about the Series 79.
Frequently Asked Questions
  1. What are Common Examples of Monopolistic Markets?

    Discover what causes real instances of market monopoly, how it persists and where monopoly privilege is most common in the ...
  2. What is the gold standard?

    The gold standard is a monetary system where a country's currency or paper money has a value directly linked to gold, but ...
  3. What's the most expensive stock of all time?

    The most expensive publicly traded stock of all time is Warren Buffett’s Berkshire Hathaway.
  4. What is a "socially responsible" mutual fund?

    As the name suggests, socially responsible mutual funds invest exclusively in socially responsible investments.
Trading Center