§78r — Title 15 Commerce and Trade | U.S. Code

Summary

If someone puts a false or misleading statement in a required filing or registration and that false statement causes a person who did not know it was false to buy or sell a security at a price affected by it, the person who made the statement must pay for the losses caused by that reliance. The person accused can avoid paying if they prove they acted in good faith and did not know the statement was false. You can sue in court, and the court may ask for money up front for costs and can order either side to pay reasonable costs and lawyers’ fees. A person who pays under this rule can try to get part of the payment from others who would have had to pay if they had been sued. You must bring the lawsuit within one year after you discover the facts and no later than three years after the problem occurred.

Title 15, §78r

Commerce and Trade — Source: USLM XML via OLRC

(a)Any person who shall make or cause to be made any statement in any application, report, or document filed pursuant to this chapter or any rule or regulation thereunder or any undertaking contained in a registration statement as provided in subsection (d) of section 78o of this title, which statement was at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact, shall be liable to any person (not knowing that such statement was false or misleading) who, in reliance upon such statement, shall have purchased or sold a security at a price which was affected by such statement, for damages caused by such reliance, unless the person sued shall prove that he acted in good faith and had no knowledge that such statement was false or misleading. A person seeking to enforce such liability may sue at law or in equity in any court of competent jurisdiction. In any such suit the court may, in its discretion, require an undertaking for the payment of the costs of such suit, and assess reasonable costs, including reasonable attorneys’ fees, against either party litigant.

(b)Every person who becomes liable to make payment under this section may recover contribution as in cases of contract from any person who, if joined in the original suit, would have been liable to make the same payment.

(c)No action shall be maintained to enforce any liability created under this section unless brought within one year after the discovery of the facts constituting the cause of action and within three years after such cause of action accrued.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This chapter, referred to in subsec. (a), was in the original “this title”. See

References in Text

note set out under section 78a of this title.

Amendments

1936—Subsec. (a). Act May 27, 1936, inserted “or any undertaking contained in a registration statement as provided in subsection (d) of section 78o of this title”.

§78r Liability for misleading statements

Summary

Title 15, §78r

Notes & Related Subsidiaries

Editorial Notes

References in Text

References in Text

Amendments

Citations & Metadata