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Securities Outline

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This is an extract of our Securities document, which we sell as part of our Business Associations Outlines collection written by the top tier of Thomas Jefferson School Of Law students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Business Associations Outlines. Due to the challenges of extracting text from PDFs, it will have odd formatting:

SECURITIES XI. Securities (Requires disclosure b/c sunlight is the best disinfectant) A. Both Securities Act of 1933 (more minor in this class) & 1934 (covers

transactions between people and the stock market) eliminates securities fraud under Rule 10b-5 (of 1934 Act): a. Unlawful for any person to employ any device, scheme or artifice to

defraud b. To make any untrue statement of a material fact or to omit to state a

material fact necessary in order to make the statement made, in the light of the circumstances under which they were made, not misleading, or c. 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

B. Rule 10b-5 will protect against securities fraud if the following are met: a. Misstatement/omission i. Company typically does not have duty to talk or disclose info

as soon as news comes into their possession (Gallagher)

b. Materiality i. Substantial likelihood that reasonable investor would only

invest based on that material fact or speculation where it must be shown that this material fact is common among all investors

c. Reliance i. Fraud on the market (causal link between any misstatement and

any stock purchaser, because the misstatements defraud the entire market and thus affect the price of the stock. Therefore, a material misstatement's effect on an individual purchaser is no less significant than the effect on the entire market) removes necessity of showing individual reliance b/c it is based on the

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