§80b–6 Prohibited Transactions by Investment Advisers

Summary

It is illegal for an investment adviser who uses the mail or any way that crosses state lines to do any of these four things. (1) Use tricks or schemes to cheat a client or possible client. (2) Make deals or run a business that cheats or deceives a client or possible client. (3) When trading for their own account or acting as a broker for someone else, buy or sell a security with a client without telling the client in writing before the trade what role they have and getting the client’s consent. The rule in (3) does not apply if a broker or dealer is not acting as an investment adviser for that trade. (4) Use any other fraudulent, deceptive, or manipulative acts, practices, or business methods. The Commission must write rules that define those fraudulent or deceptive acts and set up ways to try to stop them.