Commerce and Trade - 15 USC Section 77l

01/03/05

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.

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.

Last modified: June 14, 2006