Liability Under Section 10b or Rule 10b5

The video tutorial explains the legal framework under the 34 Act, focusing on Section 10 and Rule 10B5. It outlines how these provisions protect purchasers of shares from fraudulent activities by companies. The tutorial details the elements required to establish a cause of action, including deceit, intent to defraud, and reliance on misleading information, which can lead to liability under Rule 10B5. Both private individuals and the SEC can bring actions under this rule.

What is the primary purpose of Section 10 in the 34 Act?

• To authorize civil actions

• To regulate insider trading

• To establish tax guidelines

• To define criminal penalties

Which rule provides the procedural method for bringing a cause of action under the 34 Act?

• Rule 10A5

• Rule 34A

• Rule 10B5

• Rule 5C10

Under Rule 10B5, what can make a company liable?

• Paying high dividends

• Using schemes to defraud

• Hiring new employees

• Expanding business operations

Who can bring actions under Rule 10B5?

• Both private individuals and the SEC

• Only private individuals

• Only government agencies

• Only the SEC

Which of the following is NOT an element required to establish a cause of action under Rule 10B5?

• Intent to defraud

• Company's profit increase

• Material misstatement

• Purchaser's reliance