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U.S. Code as of:
01/19/04
Section 78h. 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 -
(a) 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.
(b) 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.
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