17 C.F.R. § 230.176

Circumstances affecting the determination of what constitutes reasonable investigation and reasonable grounds for belief under section 11 of the Securities Act

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In determining whether or not the conduct of a person constitutes a reasonable investigation or a reasonable ground for belief meeting the standard set forth in section 11(c), relevant circumstances include, with respect to a person other than the issuer.

(a) The type of issuer;

(b) The type of security;

(d) The office held when the person is an officer;

(e) The presence or absence of another relationship to the issuer when the person is a director or proposed director;

(f) Reasonable reliance on officers, employees, and others whose duties should have given them knowledge of the particular facts (in the light of the functions and responsibilities of the particular person with respect to the issuer and the filing);

(g) When the person is an underwriter, the type of underwriting arrangement, the role of the particular person as an underwriter and the availability of information with respect to the registrant; and

(h) Whether, with respect to a fact or document incorporated by reference, the particular person had any responsibility for the fact or document at the time of the filing from which it was incorporated.

[47 FR 11433, Mar. 16, 1982, as amended at 76 FR 71876, Nov. 21, 2011]

Notes of Decisions

Cited in 9 cases (1 in the last 5 years), 1994–2023 · leading case: Federal Housing Finance Agency v. Nomura Holding America, Inc.

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Federal Housing Finance Agency v. Nomura Holding America, Inc. (2017) ca2 “2d at 674-77 ; 17 C.F.R. § 230.176 (listing relevant considerations in deciding whether an investigation was reasonable under Section 11).”

In Re Enron Corp. Sec., Derivative & ERISA Lit. (2003) txsd “17 C.F.R. § 230.176 . Although the reasonableness of a defendant’s investigation or reasonable ground for his belief in and reliance on an expertised financial statement or expert report is usually a question for the jury, it may become a question of law on summary judgment…”

In Re Lehman Bros. Securities and Erisa Litigation (2011) nysd “§ 77k(c); 17 C.F.R. § 230.176 . 406 . The Court already has noted that it may consider the Examiner's Report on this motion to dismiss as it was "integral” to the TAC.”

In Re WorldCom, Inc. Securities Litigation (2004) nysd “17 C.F.R. § 230.176 . Although “[n]o court has ever been called upon to interpret Rule 176,” the SEC’s own commentary on the rule makes clear that Rule 176 did not alter the fundamental nature of underwriters’ due diligence obligations.”

Dannenberg v. PaineWebber Inc. (1994) ca9 “§ 77k(c); see 17 C.F.R. § 230.176 (factors affecting the reasonableness of an investigation under section 11).”

Federal Housing Finance Agency v. Nomura Holding America Inc. (2014) nysd “17 C.F.R. § 230.176 . These circumstances include (a) The type of issuer; (b) The type of security; (c) The type of [defendant]; [•••] (e)The presence or absence of another relationship to the issuer when the person is a director .”

In Re Initial Public Offering Antitrust Litigation (2003) nysd “144A (Securities Act *513 Rule 144A governing private resales of securities to institutions); 17 C.F.R. § 230.176 (Securities Act Rule 176 governing circumstances affecting the determination of what constitutes reasonable investigation and reasonable grounds for belief under §…”

Dannenberg v. Painewebber Inc. (1994) ca9 “§ 77k(c); see 17 C.F.R. § 230.176 (factors affecting the reasonableness of an investigation under section 11).”

Camelot Event Driven Fund v. Morgan Stanley & Co. LLC (2023) nysupct · cites it 2× “, the Conflicted Defendants in meeting their obligation ( 17 CFR § 230.176 ). To the extent that the Underwriter Defendants ultimately can establish an affirmative due diligence defense based on having asked all appropriate questions and conducted the appropriate analysis, this…”

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