Rule 10b-5

AAA

DEFINITION of 'Rule 10b-5'

A regulation formally known as the Employment of Manipulative and Deceptive Practices that was created under the Securities Exchange Act of 1934. This rule deems it to be illegal for anybody to directly or indirectly use any measure to defraud, make false statements, omit relevant information or otherwise conduct operations of business that would deceive another person; in relation to conducting transactions involving stock and other securities.

INVESTOPEDIA EXPLAINS 'Rule 10b-5'

This rule is the main basis for the Securities and Exchange Commission (SEC) to investigate possible security fraud claims.

Examples of offenses that would violate rule 10b-5 would be: executives making false statements in order to drive up share prices or a company hiding huge losses or low revenues with creative accounting practices.

RELATED TERMS
  1. Stock

    A type of security that signifies ownership in a corporation ...
  2. Security

    A financial instrument that represents: an ownership position ...
  3. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  4. Revenue

    The amount of money that a company actually receives during a ...
  5. Securities Exchange Act Of 1934

    The Securities Exchange Act of 1934 was created to provide governance ...
  6. Securities Act Of 1933

    A federal piece of legislation enacted as a result of the market ...
RELATED FAQS
  1. How is free enterprise affected by monetary policy?

    Monetary policy is concerned with the quality, quantity and function of money instruments in an economy. Perhaps the best ... Read Full Answer >>
  2. What are the business consequences of using FIFO vs. LIFO accounting methods?

    If a company uses a first-in, first-out accounting method (FIFO), it's likely that its reported earnings will be higher than ... Read Full Answer >>
  3. How do you analyze inventory on the balance sheet?

    In accounting, inventory represents a company's raw materials, work in progress and finished products. Financial professionals ... Read Full Answer >>
  4. How are earmarks and pork barrel spending related?

    Both earmarks and pork barrel spending involve spending money on certain projects or specific events. Projects paid for by ... Read Full Answer >>
  5. What is the purpose of the Herfindahl-Hirschman Index?

    The Herfindahl-Hirschman Index (HHI) evaluates the concentration of a firm in a market. It is used by the government to ... Read Full Answer >>
  6. In what types of economies are regressive taxes common?

    Regressive taxation systems are more likely to be found in developing countries or emerging market economies than in the ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Handcuffs And Smoking Guns: The Criminal Elements Of Wall Street

    From godfathers to perps, familiarize yourself with the "criminal elements" creeping around Wall Street.
  2. Investing Basics

    Policing The Securities Market: An Overview Of The SEC

    Find out how this regulatory body protects the rights of investors.
  3. Personal Finance

    Step-by-Step: How To Replace Or Renew Your Green Card

    It's not fast and it's not cheap. But it is pretty easy. Here's how.
  4. Economics

    Current Countries Under A Western Embargo

    We look at which countries the United States and European Union have imposed an imposed embargoes on and why.
  5. Options & Futures

    SEC-Regulated Options Brokers

    Investopedia provides a List Of SEC-Regulated Options Brokers
  6. Economics

    How Changing Demographics Affects U.S Elections

    With the 2016 election upcoming, the change in two of the country's largest demographics will go a long way in determining who controls the White House.
  7. Fundamental Analysis

    What is Quantitative Analysis?

    Quantitative analysis refers to the use of mathematical computations to analyze markets and investments.
  8. Economics

    Explaining Residual Value

    Residual value is a measurement of how much a fixed asset is worth at the end of its lease, or at the end of its useful life.
  9. Economics

    How The GDP Of The US Is Calculated

    The US GDP may not be a perfect economic measure, but the ability to compare it to prior periods and other countries makes it the most applicable.
  10. Personal Finance

    Why Do Employers Have To Fill Out The I-9 Form?

    With all the employment opportunities in the U.S. attracting people from around the world, the I-9 form establishes who is eligible to work here.

You May Also Like

Hot Definitions
  1. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  2. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  3. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  4. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  5. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  6. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center