U.S. Securities Law

Under modern U.S. securities law, corporations can be held liable if they make one of a number of mistakes. Under SEC Rule 10B-5, companies can be held liable if fraud is committed in connection with the purchase or sale of any security. Similarly, insider trading in which individuals such as corporate directors and officers use knowledge about the firm to buy or sell stocks is also a source of liability. Third, officers, directors, and certain large stockholders are required to file reports with the SEC concerning their ownership and trading of the corporation's securities. A failure to do so constitutes inappropriate and illegal behavior. Companies are, fourth

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