Antifraud provision
Advisers Act Section 206 · 15 U.S.C. 80b-6
Prohibited transactions by investment advisers
Read the current text at the source ↗Guide: What Is MNPI? Material Non-Public Information for Investment Advisers
Guide: Form ADV Part 2A and 2B: The Brochure and Brochure Supplements
Guide: AI Compliance for Investment Advisers: AI Washing, Marketing Claims, Records and Vendors
Guide: Code of Ethics Requirements for RIAs: Rule 204A-1 Explained
Guide: Gifts and Entertainment Policy for Investment Advisers
Guide: Outside Business Activities for Investment Adviser Representatives
Guide: The Fiduciary Duty of Investment Advisers: Care, Loyalty and Disclosure
Guide: The SEC Pay-to-Play Rule for Investment Advisers: Rule 206(4)-5
- Applies to
- SEC-registered investment adviser, Exempt reporting adviser, State-registered adviser
What the rule says
A description of the source text.
The antifraud provision, and the source of the fiduciary duty an adviser owes its clients. It is unlawful for any adviser, using the mails or interstate commerce, to employ any device, scheme or artifice to defraud a client or prospective client; to engage in any transaction, practice or course of business that operates as a fraud or deceit on a client or prospective client; knowingly to trade with a client as principal for its own account, or to act as broker for someone other than the client on the other side of a client's trade, without disclosing that capacity in writing and obtaining the client's consent before completion; or to engage in any act, practice or course of business that is fraudulent, deceptive or manipulative. Paragraph (4) is the rulemaking authority behind every rule in this library numbered 206(4)-something.
What it requires
Luna's plain-English reading, not the Commission's words.
- 01This section reaches every adviser, registered or not, which is why an exempt reporting adviser is not outside the antifraud regime.
- 02Rules numbered 206(4)-1, 206(4)-2, 206(4)-5 and 206(4)-7 exist under paragraph (4). Reading them without reading this is reading the branch and not the trunk.
- 03Principal and cross transactions need written disclosure and consent before the transaction is completed, not after.
What examiners find
Luna's observations, not a Commission publication.
- Conflicts disclosed in a brochure nobody updated when the conflict changed.
- Principal trades papered after the fact.
Topics
Source last checked against the regulator's copy on October 14, 2026. That date is written by an automated check, not by hand.
Luna Compliance is software, not a law firm. This page is not legal advice and reading it creates no attorney-client relationship. Where this page and the regulator's copy differ, the regulator's governs.