SEC v. Capital Gains Research Bureau, Inc.

United States Supreme Court

375 U.S. 180 (1963)

Relevant factsFree

Capital Gains Research Bureau (defendant) repeatedly bought securities, recommended them to newsletter subscribers, and sold for a profit once the recommendation increased the price, without disclosing this practice to subscribers; the SEC (plaintiff) sued under the Investment Advisers Act of 1940, and the court of appeals ruled for Capital Gains.

IssueFree

Whether the Investment Advisers Act of 1940 requires advisers to disclose their practice of trading based on the anticipated effect of their own securities recommendations.

Holding & reasoning

The court resolved the question by applying the controlling rule to the facts and explaining precisely why the outcome followed. Its reasoning ties the doctrine to the record so you can reproduce the analysis on an exam.

Procedural history, concurrence & dissent

This section traces the case from the trial court through appeal and lays out how each opinion lands. Separate writings sharpen the majority's limits and flag the arguments most likely to resurface in class.

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