CITE

    15 USC Sec. 77l                                             01/08/2008

EXPCITE

    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2A - SECURITIES AND TRUST INDENTURES
    SUBCHAPTER I - DOMESTIC SECURITIES

HEAD

    Sec. 77l. Civil liabilities arising in connection with prospectuses
      and communications

STATUTE

    (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.

SOURCE

    (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.