Rule 10b-5 [Securities] Law and Legal Definition

Rule 10b-5 is a Securities and Exchange Commission rule that prohibits deceptive or manipulative practices like material misrepresentations or omissions in the buying or selling of securities. It is one of the most important rules promulgated by the U.S. Securities and Exchange Commission, pursuant to its authority granted under the Securities Exchange Act of 1934. The rule is codified at 17 CFR 240.10b-5. In order to establish a claim under Rule 10b-5, plaintiffs must show (i) Manipulation or Deception; (ii) Materiality; (iii) "In Connection With" the purchase or sale of securities; and (iv) Scienter. Private plaintiffs have the additional burden of establishing (v) Standing - Purchaser/Seller Requirement; (vi) Reliance; (vii) Loss Causation; and (viii) Damages.

It is also known as anti fraud rule.