404 U.S. 6 (1971)
Superintendent of Insurance of New York v. Bankers Life & Casualty Co.
Does a fraudulent scheme that misappropriates the proceeds of a corporation's sale of securities satisfy the "in connection with" requirement of §10(b) and Rule 10b-5, even if the sale occurs at a fair price and the deception concerns the use or disposition of the proceeds rather than the security's value?
Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5 broadly prohibit the use of any manipulative or deceptive device or contrivance in connection with the purchase or sale of any security. The "in connection with" element is satisfied when the fraudulent scheme coincides with, touches, or is facilitated by a securities transaction; the deception need not concern the investment value or market price of the security, and it is immaterial that the security is sold for fair value if the fraudulent device is used to effect or exploit the sale.
Yes. The complaint stated a claim under §10(b) and Rule 10b-5. A scheme to misappropriate the proceeds of a securities sale employs a deceptive device "in connection with" the sale, even where the security was sold for fair value and the misrepresentation concerned the proceeds rather than the security itself.
Bankers Life is a foundational case on the breadth of §10(b)/Rule 10b-5's "in connection with" requirement. It establishes that securities fraud encompasses schemes where a securities transaction serves as the conduit for deception—such as diverting the proceeds of a sale—without any need to show price impact or a misstatement about the security's value. The decision allows corporate receivers and similarly situated sellers to bring 10b-5 claims when a company is defrauded in the course of selling its securities. It has been repeatedly cited to support a flexible, transaction-focused approach to the nexus requirement, notably in SEC v. Zandford, and it helps demarcate the line later emphasized in Santa Fe Industries v. Green: deception or manipulation is required, but it need not be classic market manipulation. For students, the case is crucial for understanding the elements of 10b-5, especially the meaning of "in connection with," and for appreciating how federal securities law addresses corporate looting executed through securities trades.