Written under Section 10(b) of the securities-exchange-act-1934, the rule reaches any device or scheme to defraud, any untrue statement of material fact or omission that makes statements misleading, and any practice operating as a fraud. It applies to any security, registered or not, and to any person.
Courts require scienter, meaning intent or recklessness rather than negligence. Private plaintiffs must also show materiality, reliance, loss causation and damages, with the fraud-on-the-market presumption filling in reliance for efficiently traded stocks.
Almost every enforcement theme in this section runs through it: insider-trading under both the classical and misappropriation-theory, market-manipulation, pump-and-dump promotions and false disclosure. It is the reason companies obsess over what is said publicly and when.
Related: insider-trading, misappropriation-theory, material-non-public-information, market-manipulation, securities-exchange-act-1934