SECTION
9 OF THE SECURITIES EXCHANGE ACT OF 1934
15
U.S.C. § 78i (1988)
(a) Transactions relating to purchase or sale of
security
It
shall be unlawful for any person, directly or indirectly, by the use of the
mails or any means or instrumentality of interstate commerce, or of any
facility of any national securities exchange, or for any member of a national
securities exchange-
(1) For the purpose of
creating a false or misleading appearance of active trading in any security
registered on a national securities exchange, or a false or misleading
appearance with respect to the market for any such security, (A) to effect any
transaction in such security which involves no change in the beneficial
ownership thereof, or (B) to enter an order or orders for the purchase of such
security with the knowledge that an order or orders of substantially the same
size, at substantially the same time, and at substantially the same price, for
the sale of any such security, has been or will be entered by or for the same or
different parties, or (C) to enter any order or orders for the sale of any such
security with the knowledge that an order or orders of substantially the same
size, at substantially the same time, and at substantially the same price, for
the purchase of such security, has been or will be entered by or for the same
or different parties.
(2) To effect, alone or
with one or more other persons, a series of transactions in any security
registered on a national securities exchange creating actual or apparent active
trading in such security or raising or depressing the price of such security,
for the purpose of inducing the purchase or sale of such security by others.
(3) If a dealer or
broker, or other person selling or offering for sale or purchasing or offering
to purchase the security, to induce the purchase or sale of any security
registered on a national securities exchange by the circulation or
dissemination in the ordinary course of business of information to the effect
that the price of any such security will or is likely to rise or fall because
of market operations of any one or more persons conducted for the purpose of
raising or depressing the prices of such security.
(4) If a dealer or
broker, or other person selling or offering for sale or purchasing or offering
to purchase the security, to make, regarding any security registered on a
national securities exchange, for the purpose of inducing the purchase or sale
of such security, any statement which was at the time and in the light of the
circumstances under which it was made, false or misleading with respect to any
material fact, and which he knew or had reasonable ground to believe was so
false or misleading.
(5) For a consideration,
received directly or indirectly from a dealer or broker, or other person
selling or offering for sale or purchasing or offering to purchase the
security, to induce the purchase or sale of any security registered on a
national securities exchange by the circulation or dissemination of information
to the effect that the price of any such security will or is likely to rise or
fall because of the market operations of any one or more persons conducted for
the purpose of raising or depressing the price of such security.
(6) To effect either
alone or with one or more other persons any series of transactions for the
purchase and/or sale of any security registered on a national securities
exchange for the purpose of pegging, fixing, or stabilizing the price of such
security 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.
(b) Transactions relating to puts, calls, straddles, or
options
It
shall be unlawful for any person to effect, by use of any facility of a national
securities exchange, 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-
(1) any transaction in
connection with any security whereby any party to such transaction acquires any
put, call, straddle, or other option or privilege of buying the security from
or selling the security to another without being bound to do so; or
(2) any transaction in
connection with any security with relation to which he has, directly or
indirectly, any interest in any such put, call, straddle, option, or privilege;
or
(3) any transaction in
any security for the account of any person who he has reason to believe has,
and who actually has, directly or indirectly, any interest in any such put,
call, straddle, option, or privilege with relation to such security.
(c) Endorsement or guarantee of puts, calls, straddles,
or options
It
shall be unlawful for any member of a national securities exchange directly or
indirectly to endorse or guarantee the performance of any put, call, straddle,
option, or privilege in relation to any security registered on a national
securities exchange, 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.
(d) Registered warrant, right, or convertible security
not included in "put", "call", "straddle", or
"option"
The
terms "put", "call", "straddle",
"option", or "privilege" as used in this section shall not
include any registered warrant, right, or convertible security.
(e) Persons liable; suits at law or in equity
Any
person who willfully participates in any act or transaction in violation of
subsections (a), (b), or (c) of this section, shall be liable to any person who
shall purchase or sell any security at a price which was affected by such act
or transaction, and the person so injured may sue in law or in equity in any
court of competent jurisdiction to recover the damages sustained as a result of
any such act or transaction. In any
such suit the court may, in its discretion, require an undertaking for the
payment of the costs of such suit, and assess reasonable costs, including reasonable
attorneys' fees, against either party litigant. Every person who becomes liable to make any payment under this
subsection may recover contribution as in cases of contract from any person
who, if joined in the original suit, would have been liable to make the same
payment. No action shall be maintained
to enforce any liability created under this section, unless brought within one
year after the discovery of the facts constituting the violation and within
three years after such violation.
(f) Subsection (a) not applicable to exempted securities
The
provisions of subsection (a) of this section shall not apply to an exempted
security.
(g) Foreign currencies
Notwithstanding
any other provision of law, the Commission shall have the authority to regulate
the trading of any put, call, straddle, option, or privilege on any security,
certificate of deposit, or group or index of securities (including any interest
therein or based on the value thereof), or any put, call, straddle, option, or
privilege entered into on a national securities exchange relating to foreign
currency (but not, with respect to any of the foregoing, an option on a
contract for future delivery).
(h) Limitations on practices that affect market
volatility
It
shall be unlawful for any person, by the use of the mails or any means or
instrumentality of interstate commerce or of any facility of any national
securities exchange, to use or employ any act or practice in connection with
the purchase or sale of any equity security in contravention of such rules or
regulations as the Commission may adopt, consistent with the public interest,
the protection of investors, and the maintenance of fair and orderly markets-
(1) to prescribe means
reasonably designed to prevent manipulation of price levels of the equity
securities market or a substantial segment thereof; and
(2) to prohibit or
constrain, during periods of extraordinary market volatility, any trading
practice in connection with the purchase or sale of equity securities that the
Commission determines (A) has previously contributed significantly to
extraordinary levels of volatility that have threatened the maintenance of fair
and orderly markets; and (B) is reasonably certain to engender such levels of
volatility if not prohibited or constrained.
In adopting rules under paragraph (2), the Commission
shall, consistent with the purposes of this subsection, minimize the impact on
the normal operations of the market and a natural person's freedom to buy or
sell any equity security.