Fraudulent Interstate Transactions as to Any Security
Section 17 of the Securities Act contains two broad anti-fraud prohibitions.
First, Section 17(a) bars any person, in connection with the offer or sale of any securities, from any of the following:
- • Using any “device, scheme, or artifice to defraud”
- • Obtaining money or property by means of a material misrepresentation or omission
- • Engaging in any transaction, practice, or business practice that would defraud the purchaser
This prohibition applies not only to the initial distribution of the securities, but also to fraud by broker-dealers, for example.
Second, Section 17(b) makes it unlawful for anyone to publish or disseminate any advertisement or communication that describes a security, but does not purport to offer the secur