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Title 15 — Commerce and TradeRelease 119-73

§77l Civil liabilities arising in connection with prospectuses and communications

Title 15 › Chapter CHAPTER 2A— - SECURITIES AND TRUST INDENTURES › Subchapter SUBCHAPTER I— - DOMESTIC SECURITIES › § 77l

Last updated Apr 6, 2026|Official source

Summary

If a person sells or offers a security in violation of the law, or sells it by mail or across state lines using a written or spoken sales message that contains a false or missing important fact, the seller can be held responsible when the buyer did not know about the error. The seller must prove they did not know about the falsehood and could not have found it out with reasonable care. If the seller proves some of the buyer’s loss was caused by something other than the drop in value from that false or missing information, that part of the loss cannot be recovered from the seller.

Full Legal Text

Title 15, §77l

Commerce and Trade — Source: USLM XML via OLRC

(a)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,
(b)In an action described in subsection (a)(2), if the person who offered or sold such security proves that any portion or all of the amount recoverable under subsection (a)(2) 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.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

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),” 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).

Statutory Notes and Related Subsidiaries

Effective Date

of 1995 Amendment Pub. L. 104–67, title I, § 108, Dec. 22, 1995, 109 Stat. 758, provided that: “The

Amendments

made by this title [enacting section 77z–1, 77z–2, 78u–4, and 78u–5 of this title and amending this section and section 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 AmendmentAmendment by act Aug. 10, 1954, effective 60 days after Aug. 10, 1954, see note under section 77b of this title.

Construction

of 1995 AmendmentNothing 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.

Reference

Citations & Metadata

Citation

15 U.S.C. § 77l

Title 15 — Commerce and Trade

Last Updated

Apr 6, 2026

Release point: 119-73