15 U.S.C. § 78r: Liability for misleading…

Summary

Makes people who file required reports, registrations, or related documents pay for losses if a statement they made was false or misleading about an important fact when it was made. They must pay anyone who did not know the statement was false and who bought or sold a security at a price affected by that statement, unless the person can prove they acted in good faith and did not know it was false. A harmed person can sue in court for damages. If someone pays under this rule, they can seek contribution from others who would have been liable. A court may require a payment guarantee for suit costs and can award reasonable costs and lawyers’ fees to either side. Lawsuits must start within one year after the wrongdoing is discovered and no later than three years after it happened.

Title 15, §78r

Commerce and Trade, Source: USLM XML via OLRC

(a)Persons liable; persons entitled to recover; defense of good faith; suit at law or in equity; costs, etc.

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)Contribution

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)Period of limitations

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