U.S. Code » Title 15 » Chapter CHAPTER 2B— SECURITIES EXCHANGES

15 U.S.C. § 78r

Liability for misleading statements

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(a) Persons liable; persons entitled to recover; defense of good faith; suit at law or in equity; costs, etc.

Any person who shall make or cause to be made any statement in any application, report, or document filed pursuant to this chapter or any rule or regulation thereunder or any undertaking contained in a registration statement as provided in subsection (d) of section 78o of this title, which statement was at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact, shall be liable to any person (not knowing that such statement was false or misleading) who, in reliance upon such statement, shall have purchased or sold a security at a price which was affected by such statement, for damages caused by such reliance, unless the person sued shall prove that he acted in good faith and had no knowledge that such statement was false or misleading. A person seeking to enforce such liability may sue at law or in equity in any court of competent jurisdiction. In any such suit the court may, in its discretion, require an undertaking for the payment of the costs of such suit, and assess reasonable costs, including reasonable attorneys’ fees, against either party litigant.

(b) Contribution

Every person who becomes liable to make payment under this section may recover contribution as in cases of contract from any person who, if joined in the original suit, would have been liable to make the same payment.

(c) Period of limitations

No action shall be maintained to enforce any liability created under this section unless brought within one year after the discovery of the facts constituting the cause of action and within three years after such cause of action accrued.

(June 6, 1934, ch. 404, title I, § 18, 48 Stat. 897; May 27, 1936, ch. 462, § 5, 49 Stat. 1379.)Editorial NotesReferences in Text

This chapter, referred to in subsec. (a), was in the original “this title”. See References in Text note set out under section 78a of this title.

Amendments

1936—Subsec. (a). Act May 27, 1936, inserted “or any undertaking contained in a registration statement as provided in subsection (d) of section 78o of this title”.

Notes of Decisions
Cited in 262 cases (6 in the last 5 years), 1939–2026 · leading case: Touche Ross & Co. v. Redington
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Touche Ross & Co. v. Redington (1979) scotus · cites it 9× “§ 78p (b); § 18 (a), 15 U. S. C. § 78r (a). Section 9 (e) of the 1934 Act also expressly provides a private right of action.”
Ernst & Ernst v. Hochfelder (1976) scotus · cites it 6× “897 , as amended, 15 U. S. C. § 78r (misleading statements in any document filed pursuant to the 1934 Act).”
Basic Inc. v. Levinson (1988) scotus · cites it 4× “, Restatement (Second) of Torts § 525 (1977); W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law of Torts § 108 (5th ed.”
Brody v. Stone & Webster, Inc. (2005) ca1 · cites it 4× “10b-5, as well as § 18 of the Exchange Act, 15 U.S.C. § 78r. In addition, Smith and Langford are alleged to have violated § 20(a) of the Exchange Act, 15 U.”
In Re Alstom SA Securities Litigation (2005) nysd · cites it 3× “LEGAL STANDARD Section 18 (“Section 18”) of the Exchange Act creates a private cause of action against any person' who makes or causes to be made materially misleading statements in reports or other documents filed pursuant to the Exchange Act, unless that person can prove that…”
Miller Inv. Trust v. Morgan Stanley & Co. (2018) dcd · cites it 8× “Following several iterations of the complaint, after each of which KPMG-HK has moved to dismiss, now before me is KPMG-HK's motion for dismissal of the two counts against it set forth in the Third Amended Complaint: negligent misrepresentation under state common law and…”
Deephaven Private Placement Trading, Ltd. v. Grant Thornton & Co. (2006) ca10 · cites it 6× “, and WETI Global Fund, Ltd (collectively, Investors) — against Daw’s former independent auditors, Grant Thornton LLP (Grant Thornton), under Section 18(a) of the Securities Exchange Act of 1934 (Exchange Act), 15 U.S.C. § 78r(a). The district court granted Grant Thornton’s…”
DeKalb County Pension Fund v. Transocean Ltd. (2016) ca2 · cites it 3× “tion (d) of section 78o of this title, which statement was at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact, shall be liable to any person (not knowing that such statément was false or misleading)…”
Central Bank of Denver, N. A. v. First Interstate Bank of Denver, N. A. (1994) scotus · cites it 2× “15 U. S. C. § 78r. And § 20A, added in 1988, prohibits any person from engaging in insider trading.”
In Re Pfizer Inc. Securities Litigation (2008) nysd · cites it 5× “Section 18 creates a private cause of action against any defendant who makes or causes to be made materially misleading statements in reports or other documents filed pursuant to the Exchange Act, unless that defendant can prove that he or she acted in good faith and without…”
In Re Data Access Systems Securities Litigation. Appeal of Tolins & Lowenfels & Roger A. Tolins. Appeal of I. Kahlowsky (1988) ca3 · cites it 3× “§ 78p(b) (profits from purchase and sale of securities within six months); § 18(c), 15 U.S.C. § 78r(c) (liability for misleading statements in any application, report, or filed document).”
SRM Global Master Fund Ltd. Partnership v. Bear Stearns Companies LLC (2014) nysd · cites it 5× “The last Exchange Act filing cited by SRM is Bear Stearns’ 2007 10-K, filed on January 29, 2008. (Compl. ¶¶ 211-212.”
Show all 262 citing cases →
— 15 U.S.C. § 78r(a) — 129 cases
Basic Inc. v. Levinson (1988) scotus “, Restatement (Second) of Torts § 525 (1977); W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law of Torts § 108 (5th ed.”
In Re Alstom SA Securities Litigation (2005) nysd “LEGAL STANDARD Section 18 (“Section 18”) of the Exchange Act creates a private cause of action against any person' who makes or causes to be made materially misleading statements in reports or other documents filed pursuant to the Exchange Act, unless that person can prove that…”
Deephaven Private Placement Trading, Ltd. v. Grant Thornton & Co. (2006) ca10 “, and WETI Global Fund, Ltd (collectively, Investors) — against Daw’s former independent auditors, Grant Thornton LLP (Grant Thornton), under Section 18(a) of the Securities Exchange Act of 1934 (Exchange Act), 15 U.S.C. § 78r(a). The district court granted Grant Thornton’s…”
DeKalb County Pension Fund v. Transocean Ltd. (2016) ca2 “tion (d) of section 78o of this title, which statement was at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact, shall be liable to any person (not knowing that such statément was false or misleading)…”
Brody v. Stone & Webster, Inc. (2005) ca1 “10b-5, as well as § 18 of the Exchange Act, 15 U.S.C. § 78r. In addition, Smith and Langford are alleged to have violated § 20(a) of the Exchange Act, 15 U.”
— 15 U.S.C. § 78r(b) — 6 cases
Fed. Sec. L. Rep. P 96,926 Heizer Corporation v. Jordon Ross (1979) ca7
Prager v. Knight/Trimark Group, Inc. (2000) njd
Chris-Craft Industries, Inc. v. Piper Aircraft Corp. (1973) ca2
Baughman v. Cooper-Jarrett, Inc. (1975) pawd
Robin v. Doctors Officenters Corp. (1989) ilnd
— 15 U.S.C. § 78r(c) — 56 cases
In Re Data Access Systems Securities Litigation. Appeal of Tolins & Lowenfels & Roger A. Tolins. Appeal of I. Kahlowsky (1988) ca3 “§ 78p(b) (profits from purchase and sale of securities within six months); § 18(c), 15 U.S.C. § 78r(c) (liability for misleading statements in any application, report, or filed document).”
In Re Pfizer Inc. Securities Litigation (2008) nysd “Section 18 creates a private cause of action against any defendant who makes or causes to be made materially misleading statements in reports or other documents filed pursuant to the Exchange Act, unless that defendant can prove that he or she acted in good faith and without…”
In Re Alstom SA Securities Litigation (2005) nysd
Oaktree Capital Management, L.P. v. KPMG (2013) nvd
SRM Global Master Fund Ltd. Partnership v. Bear Stearns Companies LLC (2014) nysd “The last Exchange Act filing cited by SRM is Bear Stearns’ 2007 10-K, filed on January 29, 2008. (Compl. ¶¶ 211-212.”
— 15 U.S.C. § 78r(e) — 7 cases
Fujisawa Pharmaceutical Company, Ltd., and Fujisawa Usa, Inc. v. John K. Kapoor (1997) ca7
In Re Pfizer Inc. Securities Litigation (2008) nysd “Section 18 creates a private cause of action against any defendant who makes or causes to be made materially misleading statements in reports or other documents filed pursuant to the Exchange Act, unless that defendant can prove that he or she acted in good faith and without…”
Bensinger v. Denbury Resources Inc. (2014) nyed
Oaktree Capital Management, L.P. v. KPMG (2013) nvd
Victor v. Argent Classic Convertible Arbitrage Fund L.P. (2010) ca2
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