17 CFR § 240.15fh-4 - (Rule 15fh-4) Antifraud provisions for security-based swap dealers and major security-based swap participants; special requirements for security-based swap dealers acting as advisors to special entities.
---
identifier: "/us/cfr/t17/s240.15fh-4"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "17 CFR § 240.15fh-4 - (Rule 15fh-4) Antifraud provisions for security-based swap dealers and major security-based swap participants; special requirements for security-based swap dealers acting as advisors to special entities."
title_number: 17
title_name: "Commodity and Securities Exchanges"
section_number: "240.15fh-4"
section_name: "(Rule 15fh-4) Antifraud provisions for security-based swap dealers and major security-based swap participants; special requirements for security-based swap dealers acting as advisors to special entities."
chapter_name: "SECURITIES AND EXCHANGE COMMISSION"
part_number: "240"
part_name: "GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78j-4, 78k, 78k-1, 78 78m, 78n, 78n-1, 78 78-4, 78-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 1681w(a)(1), 6801-6809, 6825, 7201 and 8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; Pub. L. 111-203, 939A, 124 Stat. 1376 (2010); and Pub. L. 112-106, sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted."
cfr_part: "240"
---
# 240.15fh-4 (Rule 15fh-4) Antifraud provisions for security-based swap dealers and major security-based swap participants; special requirements for security-based swap dealers acting as advisors to special entities.
(a) *Antifraud provisions.* It shall be unlawful for a security-based swap dealer or major security-based swap participant:
(1) To employ any device, scheme, or artifice to defraud any special entity or prospective customer who is a special entity;
(2) To engage in any transaction, practice, or course of business that operates as a fraud or deceit on any special entity or prospective customer who is a special entity; or
(3) To engage in any act, practice, or course of business that is fraudulent, deceptive, or manipulative.
(b) *Special requirements for security-based swap dealers acting as advisors to special entities.* A security-based swap dealer that acts as an advisor to a special entity regarding a security-based swap shall comply with the following requirements:
(1) *Duty.* The security-based swap dealer shall have a duty to make a reasonable determination that any security-based swap or trading strategy involving a security-based swap recommended by the security-based swap dealer is in the best interests of the special entity.
(2) *Reasonable efforts.* The security-based swap dealer shall make reasonable efforts to obtain such information that the security-based swap dealer considers necessary to make a reasonable determination that a security-based swap or trading strategy involving a security-based swap is in the best interests of the special entity. This information shall include, but not be limited to:
(i) The authority of the special entity to enter into a security-based swap;
(ii) The financial status of the special entity, as well as future funding needs;
(iii) The tax status of the special entity;
(iv) The hedging, investment, financing or other objectives of the special entity;
(v) The experience of the special entity with respect to entering into security-based swaps, generally, and security-based swaps of the type and complexity being recommended;
(vi) Whether the special entity has the financial capability to withstand changes in market conditions during the term of the security-based swap; and
(vii) Such other information as is relevant to the particular facts and circumstances of the special entity, market conditions and the type of security-based swap or trading strategy involving a security-based swap being recommended.
(3) *Exception.* The requirements of this paragraph (b) shall not apply with respect to a security-based swap if:
(i) The transaction is executed on a registered or exempt security-based swap execution facility or registered national securities exchange; and
(ii) The security-based swap dealer does not know the identity of the counterparty at a reasonably sufficient time prior to execution of the transaction to permit the security-based swap dealer to comply with the obligations of paragraph (b) of this section.
(c) *No undue influence over chief compliance officer.* It shall be unlawful for any officer, director, supervised person, or employee of a security-based swap dealer or major security-based swap participant, or any person acting under such person's direction, to directly or indirectly take any action to coerce, manipulate, mislead, or fraudulently influence the security-based swap dealer's or major security-based swap participant's chief compliance officer in the performance of their duties under the Federal securities laws or the rules and regulations thereunder.
[81 FR 30144, May 13, 2016, as amended at 88 FR 42585, June 30, 2023]