What Is a 10b-5 Opinion?
A 10b-5 opinion is a letter of counsel relating to securities trading that attests to the official statement’s truthfulness and verifies that the statement is not deceptive or omitting any important facts. A 10b-5 letter is necessary for individuals that are investigating the trustworthiness of a securities offering.
A 10b-5 opinion, although not a legal opinion, is an important part in battling securities and stocks fraud. The 10b-5 opinion comes from the 10b-5 Rule, also known as the Employment of Manipulative and Deceptive Practices. This rule addresses stocks and securities fraud by making it illegal for individuals to employ deceptive practices such as making untruthful statements or omitting information that may benefit or injure another entity in the business transaction. The 10b-5 rule and the 10b-5 opinion seek to prevent fraudulent activities from occurring in the securities trading industry.