Ark. Code Ann. § 23-42-507 (2020)
Fraud or deceit in connection with offer, sale, or purchase of securities
It is unlawful for any person, in connection with the offer, sale, or purchase of any security, directly or indirectly:
- To employ any device, scheme, or artifice to defraud;
- To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading; or
- To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
History. Acts 1959, No. 254, § 1; A.S.A. 1947, § 67-1235.
Research References
Ark. L. Rev.
Wolff, The Unconstitutionality of the Arkansas Tender Statute, 36 Ark. L. Rev. 233.
U. Ark. Little Rock L. Rev.
Frances S. Fendler & A. Heath Abshure, Private Civil Liability Under the Arkansas Securities Act, 38 U. Ark. Little Rock L. Rev. 125 (2016).
Case Notes
Evidence.
Under §§ 23-42-210 and 25-15-212(h)(5), competing facts and substantial evidence covering falsified application, overreached authority, excessive mark-ups, and securities churning were conclusive of agent's violative behavior. Selig v. Novak, 256 Ark. 278, 506 S.W.2d 825 (1974).
In allowing testimony covering prior dealings involving stock transactions defendant had with other individuals, the court has two criteria as a guide: The previous conduct must not be too remote from the offense charged and it must be similar in nature to the event charged; when such evidence is admitted it must be accompanied by a limiting instruction. Smith v. State, 266 Ark. 861, 587 S.W.2d 50, 1979 Ark. App. LEXIS 378 (Ct. App. 1979), cert. denied, Smith v. Arkansas, 445 U.S. 905, 100 S. Ct. 1082, 63 L. Ed. 2d 321 (1980).
Statute of Limitations.
The evidence of defendant's actions in offering stock in a company that he founded on a fraudulent premise constituted the “last overt act in the furtherance of a scheme or course of conduct” which culminated in the sale of the stock and tolled the five-year statute of limitations. Hunter v. State, 330 Ark. 198, 952 S.W.2d 145 (1997).
Unethical Practices.
An agent instructed seller of bonds to draw the confirmation in agent's and buyer's name jointly in order to protect himself as to the collection of an extra fee, and this was held a dishonest practice. Selig v. Novak, 256 Ark. 278, 506 S.W.2d 825 (1974).
Under former § 23-42-102(4) (see now § 23-42-102(5)), the Securities Commissioner was not limited to common law deceit in adjusting an agent's unethical practice. Selig v. Novak, 256 Ark. 278, 506 S.W.2d 825 (1974).
Markup on bonds over cost held so excessive as to amount to fraud on clients. Selig v. Novak, 256 Ark. 278, 506 S.W.2d 825 (1974).
Twenty-nine sales and purchases of bonds in a short time held violative of this section. Selig v. Novak, 256 Ark. 278, 506 S.W.2d 825 (1974).
Untrue Statements.
Evidence sufficient to find that it could not be held that the agent had made untrue statements or misrepresentations under the Securities Act, or the Franchise Practice Act, in order to induce prospective distributor into entering into distributorship agreement. Kern v. Sells Enters., Inc., 271 Ark. 904, 612 S.W.2d 94 (1981).
Evidence sufficient to find statements untrue. Hardcastle v. State, 25 Ark. App. 157, 755 S.W.2d 228 (1988).
Use of Mails.
Contract for sale of securities made in Arkansas involving the use of the mails to clear check given by buyer to seller in the transaction was governed both by federal rule and by this Act for purposes of action wherein buyer sought recovery against seller under both for alleged fraud in the transaction. Lane v. Midwest Bancshares Corp., 337 F. Supp. 1200 (E.D. Ark. 1972).