10b-5 Rule

Rule 10b-5, issued by the U.S. Securities and Exchange Commission, is a regulation designed to prevent fraud and manipulation in securities markets. It makes it illegal for anyone involved in buying or selling stocks or other securities to use false information, lie, or hide important facts that could influence an investment decision. This includes insider trading—using confidential information. The goal is to promote honesty and fairness in the markets, ensuring investors can make decisions based on accurate and complete information. Violating Rule 10b-5 can lead to legal penalties, including fines and imprisonment.