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Cyber Laws in IT & ITES

With the phenomenal and enormous growth of Internet specialized branch of Law called Cyber Law.

Immigration & Emmigration

When a person enters a new country for the purpose of establishing permanent residence and ultimately gaining citizenship , it is called

Immigration.But the residence of immigrants is subject to the conditions set by the Immigration Law.

SEC Rule 10b-5

In exercise of the powers under the provisions of the Securities Exchange Act of 1934 the Securities and Exchange Commission promulgated Sec Rules including Rule 10b therein. Sec Rules are part and parcel of the Sec law for Sec compliance. SEC Rule 10b-5 bans any act or omission of fraud or deceit in connection with purchase or sale of securities including insider trading.

The Securities and Exchange Commission found in 1942 that a company president was making very disappointing statements about the earning prospects of his company in course of buying the company’s stock himself. The Securities Act of 1933 prohibited fraudulent sale of securities but there was no provision in place to prevent fraudulent purchase of stocks. In this background the Securities and Exchange Commission promulgated the aforesaid Rule to fill up the vacuum.

The Rule reads as follows:-

“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) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or

(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.”

Moreover, any one who divulges the insider information in breach of trust as well as any body else who knowingly receives and exploits the same to his advantage may be held liable and responsible. The view of the Securities and Exchange Commission has been that any body in the possession of non public information on any security must either disclose the same or abstain from trading on those stocks altogether. The Supreme Court has also held recently that misappropriating confidential information for security trading purposes, in breach of trust and faith reposed by the source of that information, gives rise to an obligation to disclose or refrain from trading.

In Merrill Lynch v. Dabit, No. 04-1371, 547 U.S. 71 decided on March 21, 2006 the Supreme Court held that deliberate misinformation to persuade the victim to hold on to securities, which he otherwise would have sold off, also gives rise to claim for damages under the present Rule 10b-5.