Securities Law Commons^™

Securities-Investment Advisers Act Of 1940-Antifraud Provisions Interpreted, Byron Bronston S.Ed.

Michigan Law Review

Defendant, Capital Gains Research Bureau, Inc., an investment advisory service, published a bulletin entitled "A Capital Gains Report," each issue of which advised approximately 5,000 subscribers as to the investment potential of a particular corporation's stock. On at least five occasions Capital Gains, and its president and sole stockholder, also a defendant, acquired some shares of a stock and, without revealing their interest therein, recommended its purchase in the bulletin. Following each recommendation, trading in the stock increased, the price rose, and, within a few days, defendants sold their shares at a profit. The Securities and Exchange Commission, alleging that …