What does SEC Rule 10b-5 prohibit?
SEC Rule 10b-5 is the federal antifraud rule for securities. In connection with the purchase or sale of any security, it makes it unlawful to employ a scheme to defraud, to make an untrue statement of a material fact or omit a material fact, or to engage in any act that operates as a fraud or deceit.
The rule
17 CFR § 240.10b-5 makes it unlawful, in connection with the purchase or sale of any security, to make any untrue statement of a material fact or to omit a material fact necessary to make the statements made not misleading, or to engage in any act, practice, or course of business that operates as a fraud or deceit.
The statutory basis
The rule implements 15 U.S.C. § 78j(b) — Section 10(b) of the Securities Exchange Act — which makes it unlawful to use any manipulative or deceptive device in contravention of the rules the Commission prescribes. Rule 10b-5 is the rule it prescribed.
A citation to watch
A brief might cite 17 CFR § 240.10b5-1 as the antifraud prohibition. That citation does not hold up: 240.10b5-1 defines when a trade is made “on the basis of” material nonpublic information and gives an affirmative defense for pre-arranged trading plans. A real, adjacent SEC rule is not the same as the rule that states the prohibition — which is what the judge checks.
How these citations were verified
Ruled 2026-06-23Every citation in the answer above was submitted to the Kingsfield judge and ruled against the primary-law corpus — Accept, Reject, or Inconclusive, per citation. These are live verdicts, not editorial. Each card shows the verbatim authority text the verdict was rendered against.
Proposition: Under Rule 10b-5 it is unlawful, in connection with the purchase or sale of any security, to make an untrue statement of a material fact or to omit a material fact necessary to make the statements made not misleading.
“§ 240.10b-5 Employment of manipulative and deceptive devices. It shall be unlawful for any person… (b) 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…”
Cite found; proposition supported by the cited text.
Proposition: It is unlawful to use or employ, in connection with the purchase or sale of any security, any manipulative or deceptive device or contrivance in contravention of rules the Commission prescribes.
“It shall be unlawful for any person… (b) To use or employ, in connection with the purchase or sale of any security…, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.”
Cite found; proposition supported by the cited text.
Proposition: Rule 10b5-1 states the general antifraud prohibition on material misstatements and omissions in connection with the purchase or sale of a security.
Cite found, but the cited text does not support the proposition. 17 CFR 240.10b5-1 defines when a purchase or sale is “on the basis of” material nonpublic information and provides an affirmative defense for pre-arranged trading plans; the antifraud prohibition is Rule 10b-5 (240.10b-5). Regenerate with the correct authority.
Run your own work through the judge
Kingsfield rules on every citation, quote, and proposition your AI produces, against the primary law we cover. Accept, Reject, or Inconclusive, per citation, with a signed Audit Capsule.
Connect the Judge See the architectureThis page is legal information, not legal advice, and does not create an attorney-client relationship. Verdicts reflect the cited authority in the Kingsfield corpus as of the verification date shown above.