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15 U.S.C. § 78h — Restrictions on borrowing and lending by members, brokers, and dealers

Federal law — U.S. Code and appendices · legal_authorities

15 U.S.C. § 78h — Restrictions on borrowing and lending by members, brokers, and dealers

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.

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Source file: Laws/federal/codes/united-states-code/title-15/section-78h-restrictions-on-borrowing-and-lending-by-members-brokers-and-dealers--d517179b9f.md
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Source location: Title 15, Chapter 2B, § 78h; chapter-2b-securities-exchanges.md

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Federal law — U.S. Code and appendices · legal_authorities

15 U.S.C. § 78b — Necessity for regulation

For the reasons hereinafter enumerated, transactions in securities as commonly conducted upon securities exchanges and over-the-counter markets are effected with a national public interest which makes it necessary to provide for regulation and control of such transactions and of practices and matters related thereto, including transactions by officers, directors, and principal security holders, to require appropriate reports, to remove impediments to and perfect the mechanisms of a national market system for securities and a national system for the clearance and settlement of securities transactions and the safeguarding of securities and funds related thereto, and to impose requirements necessary to make such regulation and control reasonably complete and effective, in order to protect interstate commerce, the national credit, the Federal taxing power, to protect and make more effective the national banking system and Federal Reserve System, and to insure the maintenance of fair and honest markets in such transactions: (1) Such transactions (a) are carried on in large volume by the public generally and in large part originate outside the States in which the exchanges and over-the-counter markets are located and/or are effected by means of the mails and instrumentalities of interstate commerce; (b) constitute an important part of the current of interstate commerce; (c) involve in large part the securities of issuers engaged in interstate commerce; (d) involve the use of credit, directly affect the financing of trade, industry, and transportation in interstate commerce, and directly affect and influence the volume of interstate commerce; and affect the national credit. (2) The prices established and offered in such transactions are generally disseminated and quoted thro

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Federal law — U.S. Code and appendices · legal_authorities

15 U.S.C. § 78d — Securities and Exchange Commission

**(a) Establishment; composition; limitations on commissioners; terms of office** There is hereby established a Securities and Exchange Commission (hereinafter referred to as the “Commission”) to be composed of five commissioners to be appointed by the President by and with the advice and consent of the Senate. Not more than three of such commissioners shall be members of the same political party, and in making appointments members of different political parties shall be appointed alternately as nearly as may be practicable. No commissioner shall engage in any other business, vocation, or employment than that of serving as commissioner, nor shall any commissioner participate, directly or indirectly, in any stock-market operations or transactions of a character subject to regulation by the Commission pursuant to this chapter. Each commissioner shall hold office for a term of five years and until his successor is appointed and has qualified, except that he shall not so continue to serve beyond the expiration of the next session of Congress subsequent to the expiration of said fixed term of office, and except (1) any commissioner appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term, and (2) the terms of office of the commissioners first taking office after June 6, 1934, shall expire as designated by the President at the time of nomination, one at the end of one year, one at the end of two years, one at the end of three years, one at the end of four years, and one at the end of five years, after June 6, 1934. **(b) Appointment and compensation of staff and leasing authority** (1) **Appointment and compensation** — The Commission shall appoint and compensate offic

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Federal law — U.S. Code and appendices · legal_authorities

15 U.S.C. § 78f — National securities exchanges

**(a) Registration; application** An exchange may be registered as a national securities exchange under the terms and conditions hereinafter provided in this section and in accordance with the provisions of [section 78s(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section78s/a&num=0&edition=prelim), by filing with the Commission an application for registration in such form as the Commission, by rule, may prescribe containing the rules of the exchange and such other information and documents as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors. **(b) Determination by Commission requisite to registration of applicant as a national securities exchange** An exchange shall not be registered as a national securities exchange unless the Commission determines that— (1) Such exchange is so organized and has the capacity to be able to carry out the purposes of this chapter and to comply, and (subject to any rule or order of the Commission pursuant to section 78q(d) or 78s(g)(2) of this title) to enforce compliance by its members and persons associated with its members, with the provisions of this chapter, the rules and regulations thereunder, and the rules of the exchange. (2) Subject to the provisions of subsection (c) of this section, the rules of the exchange provide that any registered broker or dealer or natural person associated with a registered broker or dealer may become a member of such exchange and any person may become associated with a member thereof. (3) The rules of the exchange assure a fair representation of its members in the selection of its directors and administration of its affairs and provide that one or more directors shall be representa

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Federal law — U.S. Code and appendices · legal_authorities

15 U.S.C. § 78o — Registration and regulation of brokers and dealers

**(a) Registration of all persons utilizing exchange facilities to effect transactions; exemptions** (1) It shall be unlawful for any broker or dealer which is either a person other than a natural person or a natural person not associated with a broker or dealer which is a person other than a natural person (other than such a broker or dealer whose business is exclusively intrastate and who does not make use of any facility of a national securities exchange) to make use of the mails or any means or instrumentality of interstate commerce to effect any transactions in, or to induce or attempt to induce the purchase or sale of, any security (other than an exempted security or commercial paper, bankers’ acceptances, or commercial bills) unless such broker or dealer is registered in accordance with subsection (b) of this section. (2) The Commission, by rule or order, as it deems consistent with the public interest and the protection of investors, may conditionally or unconditionally exempt from paragraph (1) of this subsection any broker or dealer or class of brokers or dealers specified in such rule or order. **(b) Manner of registration of brokers and dealers** (1) A broker or dealer may be registered by filing with the Commission an application for registration in such form and containing such information and documents concerning such broker or dealer and any persons associated with such broker or dealer as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors. Within forty-five days of the date of the filing of such application (or within such longer period as to which the applicant consents), the Commission shall— (A) by order grant registration, or (B) institute proceedings to determine wh

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Federal law — U.S. Code and appendices · legal_authorities

15 U.S.C. § 78o–3 — Registered securities associations

**(a) Registration; application** An association of brokers and dealers may be registered as a national securities association pursuant to subsection (b), or as an affiliated securities association pursuant to subsection (d), under the terms and conditions hereinafter provided in this section and in accordance with the provisions of [section 78s(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section78s/a&num=0&edition=prelim), by filing with the Commission an application for registration in such form as the Commission, by rule, may prescribe containing the rules of the association and such other information and documents as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors. **(b) Determinations by Commission requisite to registration of applicant as national securities association** An association of brokers and dealers shall not be registered as a national securities association unless the Commission determines that— (1) By reason of the number and geographical distribution of its members and the scope of their transactions, such association will be able to carry out the purposes of this section. (2) Such association is so organized and has the capacity to be able to carry out the purposes of this chapter and to comply, and (subject to any rule or order of the Commission pursuant to section 78q(d) or 78s(g)(2) of this title) to enforce compliance by its members and persons associated with its members, with the provisions of this chapter, the rules and regulations thereunder, the rules of the Municipal Securities Rulemaking Board, and the rules of the association. (3) Subject to the provisions of subsection (g) of this section, the rules of the associat

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Federal law — U.S. Code and appendices · legal_authorities

15 U.S.C. § 78h — Restrictions on borrowing and lending by

Page 266 TITLE 15—COMMERCE AND TRADE § 78h that the amendment made by title III [amending this section] shall be effective on any date not earlier than the publication of the regulation in the Federal Reg- ister and not later than the first day of the thirteenth calendar month which begins after the date of enact- ment [Oct. 26, 1970].’’ VALIDITY OF RULES AND REGULATIONS Pub. L. 91–508, title III, § 301(b), Oct. 26, 1970, 84 Stat. 1125, provided that: ‘‘The amendment made by sub- section (a) of this section [amending this section] does not affect the continuing validity of any rule or regula- tion under section 7 of the Securities Exchange Act of 1934 [this section] in effect prior to the effective date of the amendment.’’ § 78h. Restrictions on borrowing and lending by members, brokers, and dealers It shall be unlawful for any registered broker or dealer, member of a national securities ex- change, 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 regula- tions as the Commission shall prescribe for the protection of investors to hypothecate or ar- range for the hypothecation of any securities carried for the account of any customer under circumstances (1) that will permit the commin- gling of his securities without his written con- sent with the securities of any other customer, (2) that will permit such securities to be com- mingled with the securities of any person other than a bona fide customer, or (3) that will per- mit such securities to be hypothecated, or sub- jected 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.

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