SUITS ALLEGING SECURITIES FRAUD ARE A SPECIALIZED form of class action brought on behalf of shareholders against the company issuing the purchased securities and its officers and directors (and sometimes the company's auditor and attorney). They are typically brought under section 10(b) of the Securities Exchange Act, which Congress enacted in 1933 following the stock market crash of 1929. The Act prohibits deception in the “purchase or sale of any security.” Pursuant to this section, the Securities and Exchange Commission (SEC) promulgated Rule 10b-5, which makes it unlawful to make any material misrepresentation or omission that would mislead investors. Under the Act, enforcement was delegated to the SEC; there was no explicit provision allowing for a private right of action. Just over ten years after enactment, however, individual investors were given the right to directly sue companies for violating Rule 10b-5. This right was created by judicial fiat in a 1946 federal district court opinion, which was later accepted as a fait accompli by the U.S. Supreme Court in a decision devoid of recognition of the probable consequences. The creation of a private right of action was based on the belief that private actions are an “effective weapon” of enforcement and a “necessary supplement” to limited SEC resources. These suits, which most large businesses have been subjected to, typically allege that the corporation failed to disclose material information in a timely manner.