Any person who violates Section 25401 shall be liable to the person who purchases a security from, or sells a security to, that person, who may sue either for rescission or for damages (if the plaintiff or the defendant, as the case may be, no longer owns the security), unless the defendant proves that the plaintiff knew the facts concerning the untruth or omission or that the defendant exercised reasonable care and did not know (or if the defendant had exercised reasonable care, would not have known) of the untruth or omission. Upon rescission, a purchaser may recover the consideration paid for the security, plus interest at the legal rate, less the amount of any income received on the security, upon tender of the security. Upon rescission, a seller may recover the security, upon tender of the consideration
paid for the security plus interest at the legal rate, less the amount of any income received by the defendant on the security. Damages recoverable under this section by a purchaser shall be an amount equal to the difference between (a) the price at which the security was bought plus interest at the legal rate from the date of purchase and (b) the value of the security at the time it was disposed of by the plaintiff plus the amount of any income received on the security by the plaintiff. Damages recoverable under this section by a seller shall be an amount equal to the difference between (1) the value of the security at the time of the filing of the complaint plus the amount of any income received by the defendant on the security and (2) the price at which the security was sold plus interest at the legal rate from the date of sale. Any tender specified in this section may be made at any time before entry of judgment. In addition to the relief described above, the court shall award reasonable attorney’s fees
and costs to a prevailing purchaser or seller who succeeds in establishing a right to the relief provided by this section.
Notes of Decisions
Cited in
42
cases (
6 in the last 5 years), 1968–2025 · leading case:
Zalkind v. Ceradyne, Inc., 194 Cal. App. 4th 1010 (Cal. Ct. App. 2011).
Zalkind v. Ceradyne, Inc., 194 Cal. App. 4th 1010 (Cal. Ct. App. 2011).
· cites it 3× “Corporations Code section 25501 permits recovery of damages by a seller of a security, as follows: “Damages recoverable under this section by a seller *1033 shall be an amount equal to the difference between (1) the value of the security at the time of the filing of the…”
Anschutz Corp. v. Merrill Lynch & Co., 690 F.3d 98 (2d Cir. 2012).
“” Cal. Corp. Code § 25501 (West 2006). Section 25401 provides that: It is unlawful for any person to offer or sell a security in this state or buy or offer to buy a security in this state by means of any written or oral communication which in-eludes an untrue statement of a…”
In Re Nat'l Century Fin. Enter., Inc., Inv. Litig., 541 F. Supp. 2d 986 (S.D. Ohio 2007).
· cites it 2× “Privity Credit Suisse argues that the claims for primary liability under California and Oregon law must be dismissed because those laws require strict privity, such that liability does not extend to a party who solicits the sale of a security but does not pass title.”
Lubin v. Sybedon Corp., 688 F. Supp. 1425 (S.D. Cal. 1988).
· cites it 2× “§ 77Z(1) and California Corporations Code sections 25501, 25504, 25504.”
Nat'l Credit Union Admin. Bd. v. Nomura Home Equity Loan, Inc., 764 F.3d 1199 (10th Cir. 2014).
“The California Corporate Securities Law of 1968 similarly makes a securities seller “liable to the person who purchases a security,” Cal. Corp.Code § 25501, when the security has been sold or offered “by means of any written or oral communication which includes an untrue…”
Lynch v. Cook, 148 Cal. App. 3d 1072 (Cal. Ct. App. 1983).
· cites it 2× “) Corporations Code section 25501 provides in pertinent part: “Any person who violates Section 25401 shall be liable to the person who purchases a security from him or sells a security to him, who may sue either for rescission or for damages (if the plaintiff or the defendant,…”
Bowden v. Robinson, 67 Cal. App. 3d 705 (Cal. Ct. App. 1977).
“(Corp. Code, § 25501; and see 2 Ballantine & Sterling, Cal.”
In Re Nat'l Mortg. Equity Corp. Mortg. Pool Certificates Sec. Litig., 636 F. Supp. 1138 (C.D. Cal. 1986).
“12 Riverhead’s timely claim alleges all defendants except Lord Bissell violated Cal.Corp.Code § 25501, which states: “Any person who violates Section 25401 shall be liable to the person who purchases a security from him or sells a security to him.”
Kamen v. Lindly, 2001 Cal. Daily Op. Serv. 10187 (Cal. Ct. App. 2001).
“First, Corporations Code section 25501 et seq. is modeled upon section 12(2) of the Securities Act of 1933 rather than on section 9 of the Securities Exchange Act of 1934.”
Anschutz Corp. v. Merrill Lynch & Co. Inc., 785 F. Supp. 2d 799 (N.D. Cal. 2011).
“Privity DBSI argues that TAC’s claim under California Corporation Code 25501 (which is based on Corporation Code section 25401 for selling securities using untrue statements or omitting material facts), must be dismissed for lack of privity because TAC’s purchases were made by…”
People v. Baumgart, 218 Cal. App. 3d 1207 (Cal. Ct. App. 1990).
· cites it 2× “] To avoid any implication that strict liability is involved, the Legislature provided that as a defense the defendant may: (1) prove that he exercised reasonable care and did not know of the untruth or omission, (2) show that even if he had exercised reasonable care, he would…”
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