For civil sanctions to be imposed under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, the violator must not have had an intent to defraud or knowledge of his or her misconduct.

Question

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This statement is false. To be subject to civil sanctions under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, the violator must have acted with either the intent to defraud or with reckless disregard for the truth. In other words, they do not need to have actual knowledge of their misconduct, but they must have acted with a certain level of intent or recklessness.

For Civil Sanctions to Be Imposed Under Section 10(b) of the Securities