Punishment for fraudulently inducing persons to invest money
📚 Law Minded summary
This one is not about prospectuses at all — it is about the sales pitch.
Anyone who knowingly or recklessly makes a false, deceptive or misleading statement, promise or forecast, or deliberately hides a material fact, in order to persuade someone to invest, commits fraud under section 447.
It reaches agreements to acquire or subscribe for securities, and agreements whose purpose is to make money from the movement of a security's price.
Any person who, either knowingly or recklessly makes any statement, promise or forecast which is false, deceptive or misleading, or deliberately conceals any material facts, to induce another person to enter into, or to offer to enter into,—
(a) any agreement for, or with a view to, acqu iring, disposing of, subscribing for, or underwriting securities; or (b) any agreement, the purpose or the pretended purpose of which is to secure a profit to any of the parties from the yield of securities or by reference to fluctuations in the value of securities; or (c) any agreement for, or with a view to obtaining credit facilities from any bank or financial institution, shall be liable for action under section 447.
All sections in Chapter III — Prospectus and Allotment of Securities