15-U.S.C.-78H
§78H – Restrictions On Borrowing and Lending By Members, Brokers, and Dealers
Pathway
Title 15 > Chapter 2B > Section 78h
Details
- Reference: Section 78h
- Legend: §78H – Restrictions On Borrowing and Lending By Members, Brokers, and Dealers
- USCode Year: 2013
Provision Content
It shall be unlawful for any registered broker or dealer, member of a national securities exchange, or broker or dealer who transacts a business in securities through the medium of any member of a national securities exchange, directly or indirectly—
(a) In contravention of such rules and regulations as the Commission shall prescribe for the protection of investors to hypothecate or arrange for the hypothecation of any securities carried for the account of any customer under circumstances (1) that will permit the commingling of his securities without his written consent with the securities of any other customer, (2) that will permit such securities to be commingled with the securities of any person other than a bona fide customer, or (3) that will permit such securities to be hypothecated, or subjected to any lien or claim of the pledgee, for a sum in excess of the aggregate indebtedness of such customers in respect of such securities.
(b) To lend or arrange for the lending of any securities carried for the account of any customer without the written consent of such customer or in contravention of such rules and regulations as the Commission shall prescribe for the protection of investors.
(June 6, 1934, ch. 404, title I, §8, 48 Stat. 888; Aug. 23, 1935, ch. 614, §203(a), 49 Stat. 704; Pub. L. 94–29, §5, June 4, 1975, 89 Stat. 109; Pub. L. 98–440, title I, §103, Oct. 3, 1984, 98 Stat. 1690; Pub. L. 103–325, title II, §204, Sept. 23, 1994, 108 Stat. 2199; Pub. L. 104–290, title I, §104(b), Oct. 11, 1996, 110 Stat. 3423.)
Amendments
1996—Pub. L. 104–290 redesignated subsecs. (b) and (c) as (a) and (b), respectively, and struck out former subsec. (a) which related to borrowing in ordinary course of business as broker or dealer on any security, except exempted security, registered on national securities exchange.
1994—Subsec. (a). Pub. L. 103–325 inserted or a small business related security after mortgage related security in last sentence.
1984—Subsec. (a). Pub. L. 98–440 inserted provision that no person shall be deemed to have borrowed within the ordinary course of business, within the meaning of this subsection, by reason of a bona fide agreement for delayed delivery of a mortgage related security under certain conditions.
1975—Pub. L. 94–29, §5(1), substituted any registered broker or dealer, member of a national securities exchange, or broker or dealer who transacts a business in securities through the medium of any member of a national securities exchange for any member of a national securities exchange, or any broker or dealer who transacts a business in securities through the medium of any such member in provisions preceding subsec. (a).
Subsecs. (b) to (d). Pub. L. 94–29, §5(2), redesignated subsecs. (c) and (d) as (b) and (c), respectively, and in subsec. (c) as so redesignated inserted or in contravention of such rules and regulations as the Commissioner shall prescribe for the protection of investors after written consent of such customer. Former subsec. (b), which covered the maximum allowable aggregate indebtedness of brokers, was struck out.
Change of Name
Act Aug. 23, 1935, substituted Board of Governors of the Federal Reserve System for Federal Reserve Board.
Effective Date of 1975 Amendment
Amendment by Pub. L. 94–29 effective June 4, 1975, see section 31(a) of Pub. L. 94–29, set out as a note under section 78b of this title.
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. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title.
U.S. Encyclopedia of Law Coverage
15-U.S.C.-78GG in the Legal Encyclopedia: Trade Law
In this entry about 15-U.S.C.-78GG, find legal reference material, bibliographies and premiere content related to trade law in the American Encyclopedia of Law, presenting a comprehensive view of the United States trade law-specific issues, written by authorities in the field.
15-U.S.C.-78FF in the Legal Encyclopedia: Securities Exchanges
In this entry about 15-U.S.C.-78FF, find legal reference material, bibliographies and premiere content related to securities exchanges in the American Encyclopedia of Law, presenting a comprehensive view of the United States securities exchanges-specific issues, written by authorities in the field.
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