# § 78j. Manipulative and deceptive devices
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange—
**(a)**
**(1)** To effect a short sale, or to use or employ any stop-loss order in connection with the purchase or sale, of any security other than a government 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.
**(2)** Paragraph (1) of this subsection shall not apply to security futures products.
**1** To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, or any securities-based swap agreement [^1] any manipulative or deceptive device or contrivance 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.
So in original. Probably should be followed by a comma.
**(c)**
**(1)** To effect, accept, or facilitate a transaction involving the loan or borrowing of securities 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.
**(2)** Nothing in paragraph (1) may be construed to limit the authority of the appropriate Federal banking agency (as defined in section 1813(q) of title 12), the National Credit Union Administration, or any other Federal department or agency having a responsibility under Federal law to prescribe rules or regulations restricting transactions involving the loan or borrowing of securities in order to protect the safety and soundness of a financial institution or to protect the financial system from systemic risk.
Rules promulgated under subsection (b) that prohibit fraud, manipulation, or insider trading (but not rules imposing or specifying reporting or recordkeeping requirements, procedures, or standards as prophylactic measures against fraud, manipulation, or insider trading), and judicial precedents decided under subsection (b) and rules promulgated thereunder that prohibit fraud, manipulation, or insider trading, shall apply to security-based swap agreements to the same extent as they apply to securities. Judicial precedents decided under section 77q(a) of this title and sections 78i, 78*o*, 78p, 78t, and 78u–1 of this title, and judicial precedents decided under applicable rules promulgated under such sections, shall apply to security-based swap agreements to the same extent as they apply to securities.
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**Source Credit**: (June 6, 1934, ch. 404, title I, § 10, 48 Stat. 891; Pub. L. 106–554, § 1(a)(5) [title II, § 206(g), title III, § 303(d)], Dec. 21, 2000, 114 Stat. 2763, 2763A–432, 2763A–454; Pub. L. 111–203, title VII, § 762(d)(3), title IX, §§ 929L(2), 984(a), July 21, 2010, 124 Stat. 1761, 1861, 1932.)
## Editorial Notes
### Amendments
2010—, which directed amendment of the matter following subsection (b) “by striking ‘(as defined in section 206B of the Gramm-Leach-Bliley Act), in each place that such terms appear’ ”, was executed by striking out “(as defined in section 206B of the Gramm-Leach-Bliley Act)” after “security-based swap agreements” in two places in concluding provisions following subsec. (c) to reflect the probable intent of Congress.
Subsec. (a)(1). , substituted “other than a government security” for “registered on a national securities exchange”.
Subsec. (b). , struck out “(as defined in section 206B of the Gramm-Leach-Bliley Act),” after “securities-based swap agreement”.
Subsec. (c). , which directed amendment of this section by adding subsec. (c) at the end, was executed by adding subsec. (c) after subsec. (b) to reflect the probable intent of Congress.
2000—, inserted concluding provisions at end.
Subsec. (a). , designated existing provisions as par. (1) and added par. (2).
Subsec. (b). , inserted “or any securities-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act),” before “any manipulative or deceptive device”.
## Statutory Notes and Related Subsidiaries
### Effective Date of 2010 Amendment
Amendment by sections 929L(2) and 984(a) of effective 1 day after , except as otherwise provided, see , set out as an Effective Date note under section 5301 Title 12, Banks and Banking.
Amendment by effective on the later of 360 days after , or, to the extent a provision of subtitle B (§§ 761–774) of title VII of requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provision of subtitle B, see , set out as a note under .
### Regulations
> “Not later than 2 years after the date of enactment of this Act [
>
> ], the Commission shall promulgate rules that are designed to increase the transparency of information available to brokers, dealers, and investors, with respect to the loan or borrowing of securities.”
, , , provided that:
[For definitions of terms used in , set out above, see , Banks and Banking.]
### Prohibition of Insider Trading
> “Members of Congress and employees of Congress are not exempt from the insider trading prohibitions arising under the securities laws, including section 10(b) of the Securities Exchange Act of 1934 [
>
> ] and Rule 10b–5 thereunder.”
, , , provided that:
[For definitions of “Member of Congress” and “employee of Congress”, see , set out as a Definitions note under , Government Organization and Employees.]
### Application of Insider Trading Laws
> “Executive branch employees, judicial officers, and judicial employees are not exempt from the insider trading prohibitions arising under the securities laws, including section 10(b) of the Securities Exchange Act of 1934 [
>
> ] and Rule 10b–5 thereunder.”
, , , provided that:
[For definitions of “executive branch employees”, “judicial officers”, and “judicial employees”, see , set out as a Definitions note under , Government Organization and Employees.]
## Executive Documents
### Transfer of Functions
For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. , 15 F.R. 3175, , set out under .