§ 77l. — Civil liabilities arising in connection with prospectuses and communications.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC77l]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2A--SECURITIES AND TRUST INDENTURES
SUBCHAPTER I--DOMESTIC SECURITIES
Sec. 77l. Civil liabilities arising in connection with
prospectuses and communications
(a) In general
Any person who--
(1) offers or sells a security in violation of section 77e of
this title, or
(2) offers or sells a security (whether or not exempted by the
provisions of section 77c of this title, other than paragraphs (2)
and (14) of subsection (a) of said section), by the use of any means
or instruments of transportation or communication in interstate
commerce or of the mails, by means of a prospectus or oral
communication, which includes an untrue statement of a material fact
or omits to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they were
made, not misleading (the purchaser not knowing of such untruth or
omission), and who shall not sustain the burden of proof that he did
not know, and in the exercise of reasonable care could not have
known, of such untruth or omission,
shall be liable, subject to subsection (b) of this section, to the
person purchasing such security from him, who may sue either at law or
in equity in any court of competent jurisdiction, to recover the
consideration paid for such security with interest thereon, less the
amount of any income received thereon, upon the tender of such security,
or for damages if he no longer owns the security.
(b) Loss causation
In an action described in subsection (a)(2) of this section, if the
person who offered or sold such security proves that any portion or all
of the amount recoverable under subsection (a)(2) of this section
represents other than the depreciation in value of the subject security
resulting from such part of the prospectus or oral communication, with
respect to which the liability of that person is asserted, not being
true or omitting to state a material fact required to be stated therein
or necessary to make the statement not misleading, then such portion or
amount, as the case may be, shall not be recoverable.
(May 27, 1933, ch. 38, title I, Sec. 12, 48 Stat. 84; Aug. 10, 1954, ch.
667, title I, Sec. 9, 68 Stat. 686; Pub. L. 104-67, title I, Sec. 105,
Dec. 22, 1995, 109 Stat. 757; Pub. L. 106-554, Sec. 1(a)(5) [title II,
Sec. 208(a)(3)], Dec. 21, 2000, 114 Stat. 2763, 2763A-435.)
Amendments
2000--Subsec. (a)(2). Pub. L. 106-554 substituted ``paragraphs (2)
and (14)'' for ``paragraph (2)''.
1995--Pub. L. 104-67 designated existing provisions as subsec. (a),
inserted heading, inserted ``, subject to subsection (b) of this
section,'' after ``shall be liable'' in concluding provisions, and added
subsec. (b).
1954--Act Aug. 10, 1954, inserted ``offers or'' before ``sells'' in
pars. (1) and (2).
Effective Date of 1995 Amendment
Section 108 of title I of Pub. L. 104-67 provided that: ``The
amendments made by this title [enacting sections 77z-1, 77z-2, 78u-4,
and 78u-5 of this title and amending this section and sections 77t, 78o,
78t, and 78u of this title and section 1964 of Title 18, Crimes and
Criminal Procedure] shall not affect or apply to any private action
arising under title I of the Securities Exchange Act of 1934 [15 U.S.C.
78a et seq.] or title I of the Securities Act of 1933 [15 U.S.C. 77a et
seq.], commenced before and pending on the date of enactment of this Act
[Dec. 22, 1995].''
Effective Date of 1954 Amendment
Amendment by act Aug. 10, 1954, effective 60 days after Aug. 10,
1954, see note under section 77b of this title.
Construction of 1995 Amendment
Nothing in amendment by Pub. L. 104-67 to be deemed to create or
ratify any implied right of action, or to prevent Commission, by rule or
regulation, from restricting or otherwise regulating private actions
under Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), see
section 203 of Pub. L. 104-67, set out as a Construction note under
section 78j-1 of this title.
Section Referred to in Other Sections
This section is referred to in sections 77m, 77o, 77eee of this
title.
