Securities Lawyer's Deskbook
                         published by The University of Cincinnati College of Law
UC Law logo


Securities Exchange Act of 1934





Section 8 -- 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--

  1. 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.

  2. 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.


Legislative History


June 6, 1934, c. 404, Title I, § 8, 48 Stat. 888; Aug. 23, 1935, c. 614, § 203(a), 49 Stat. 704; June 4, 1975, Pub.L. 94-29, § 5, 89 Stat. 109; Oct. 3, 1984, Pub.L. 98-440, Title I, § 103, 98 Stat. 1690; Sept. 23, 1994, Pub.L. 103-325, Title II, § 204, 108 Stat. 2199; Oct. 11, 1996, Pub.L. 104- 290, Title I, § 104(b), 110 Stat. 3423.



Notice to Users: The Deskbook is made available with the understanding that the University of Cincinnati College of Law is not engaged in rendering legal, accounting or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. See Terms and Conditions of Use.  UC Brand Ingot

© Copyright 1998-2009, University of Cincinnati, All Rights Reserved
 Contact: ronald.jones@uc.edu