Section 4: Margin contracts to buy or sell securities without actual purchase or sale; purchases or sales made on stock exchange or by persons employed on stock exchange or board of trade
Section 4. Whoever upon credit or upon margin contracts to buy or sell, or employs another to buy or sell for his account, any securities or commodities, intending at the time that there shall be no actual purchase or sale, may recover in contract from the other party to the contract, or from the person so employed, any payment made, or the value of anything delivered, on account thereof, if such other party to the contract or person so employed had reasonable cause to believe that said intention existed; but no person shall have a right of action under this section if, for his account, such other party to the contract or the person so employed makes, in accordance with the terms of the contract or employment, personally or by agent, an actual purchase or sale of said securities or commodities, or a valid contract therefor. A purchase or sale of securities, or a contract therefor, whether calling for present or future deliveries, made on any stock exchange or board of trade established for a period of at least ten years prior thereto, and recognized as valid and enforceable by the law of the jurisdiction where made, shall be deemed an actual purchase or sale within the meaning of this section.
If a purchase or sale of the securities or commodities ordered to be bought or sold is made by the person so employed on a stock exchange or board of trade, and other purchases or sales of such securities or commodities are made on the same day on such exchange or board by such person for others in due course of business, and the balance of such purchases or sales of securities or commodities is received or delivered by such person by direction of the clearing house of such exchange or board on the day when such purchase or sale or contract therefor is made, or on the regular clearing day of such exchange or board next thereafter, which shall not be more than four days after the making of such purchase or sale, or contract therefor, such purchases and sales shall be deemed actual purchases and sales within the meaning of this section.