Rule 10b-5 applies to any purchase or sale, by any person, of any security. Clauses 1 and 3 of rule 10b-5 use the terms fraud and deceit which must occur in connection with a purchase or sale but need not relate to the terms of the transaction. For example, in Securities and Exchange Commission v. Zandford , the U.S. Supreme Court found out that Zandford had violated the rule 10b-5 of the act 34 by engaging in a scheme to defraud the Woods and misappropriating their securities without their knowledge or consent; that his practices were not independent events; that each sale was made to further his fraudulent scheme and that each was deceptive because it was neither authorized by, nor disclosed to, the Woods
