Scalping As Fraud But On Who?

The past has a way of repeating itself. In 1909, the New York Supreme Court declined to enforce a contract to manipulate stock prices (which was successful), with payments due to a publisher of an investment newsletter (Ridgely) and its co-conspirator (Keene) held to be unenforceable immoral profits.  Ridgely v. Keene, 134 App. Div. 647, 119 N. Y. Supp. 451 (1909), cited in SEC vs. Capital Gains Research Bureau, 375 U.S. 180 (1963).  The Court in Capital Gains, supposing that Congress was well aware of this kind of common law fraud went on to find investment advisers to be fiduciaries, and scalping to violate the duty of an adviser to its clients: "The high standards of business morality exacted by our laws regulating the securities industry do not permit an investment adviser to trade on the market effect of his own recommendations without fully and fairly revealing his personal interests in these recommendations to his clients."