Asked by natasha savage on Apr 29, 2024
Verified
The key to liability under Section 10(b)of the Securities Exchange Act of 1934 and SEC Rule 10b-5 is whether information omitted or misrepresented in connection with the purchase or sale of a security is material .
Section 10(b)
A provision under the Securities Exchange Act of 1934, which prohibits securities fraud and insider trading in the stock market.
SEC Rule 10b-5
SEC Rule 10b-5, issued under the Securities Exchange Act of 1934, prohibits fraudulent activities in connection with the purchase or sale of securities, including insider trading and making false or misleading statements.
Information Omitted
Information that was expected or required to be included but was left out, either accidentally or intentionally.
- Gain insight into the accountability for misleading statements and fraudulent activities in securities transactions.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
True
Explanation :
Materiality is a core component of liability under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. Information is considered material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision. Misrepresentations or omissions of material facts can lead to liability because they can significantly alter the total mix of information available to investors, potentially leading to investment decisions based on incomplete or inaccurate information.
Learning Objectives
- Gain insight into the accountability for misleading statements and fraudulent activities in securities transactions.