15 U.S.C. § 77o — Liability of controlling persons

Page 152 TITLE 15—COMMERCE AND TRADE § 77o § 77o. Liability of controlling persons (a) Controlling persons Every person who, by or through stock owner- ship, agency, or otherwise, or who, pursuant to or in connection with an agreement or under- standing with one or more other persons by or through stock ownership, agency, or otherwise, controls any person liable under sections 77k or 77l of this title, shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the control- ling person had no knowledge of or reasonable ground to believe in the existence of the facts by reason of which the liability of the controlled person is alleged to exist. (b) Prosecution of persons who aid and abet vio- lations For purposes of any action brought by the Commission under subparagraph (b) or (d) of sec- tion 77t of this title, any person that knowingly or recklessly provides substantial assistance to another person in violation of a provision of this subchapter, or of any rule or regulation issued under this subchapter, shall be deemed to be in violation of such provision to the same extent as the person to whom such assistance is provided. (May 27, 1933, ch. 38, title I, § 15, 48 Stat. 84; June 6, 1934, ch. 404, title II, § 208, 48 Stat. 908; Pub. L. 111–203, title IX, § 929M(a), July 21, 2010, 124 Stat. 1861.) Editorial Notes AMENDMENTS 2010—Pub. L. 111–203 designated existing provisions as subsec. (a), inserted heading, and added subsec. (b). 1934—Act June 6, 1934, exempted from liability con- trolling persons having no knowledge or reasonable grounds for belief. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking. § 77p. Additional remedies; limitation on rem- edies (a) Remedies additional Except as provided in subsection (b), the rights and remedies provided by this subchapter shall be in addition to any and all other rights and remedies that may exist at law or in equity. (b) Class action limitations No covered class action based upon the statu- tory or common law of any State or subdivision thereof may be maintained in any State or Fed- eral court by any private party alleging— (1) an untrue statement or omission of a ma- terial fact in connection with the purchase or sale of a covered security; or (2) that the defendant used or employed any manipulative or deceptive device or contriv- ance in connection with the purchase or sale of a covered security. (c) Removal of covered class actions Any covered class action brought in any State court involving a covered security, as set forth in subsection (b), shall be removable to the Fed- eral district court for the district in which the action is pending, and shall be subject to sub- section (b). (d) Preservation of certain actions (1) Actions under State law of State of incorpo- ration (A) Actions preserved Notwithstanding subsection (b) or (c), a covered class action described in subpara- graph (B) of this paragraph that is based upon the statutory or common law of the State in which the issuer is incorporated (in the case of a corporation) or organized (in the case of any other entity) may be main- tained in a State or Federal court by a pri- vate party. (B) Permissible actions A covered class action is described in this subparagraph if it involves— (i) the purchase or sale of securities by the issuer or an affiliate of the issuer ex- clusively from or to holders of equity secu- rities of the issuer; or (ii) any recommendation, position, or other communication with respect to the sale of securities of the issuer that— (I) is made by or on behalf of the issuer or an affiliate of the issuer to holders of equity securities of the issuer; and (II) concerns decisions of those equity holders with respect to voting their secu- rities, acting in response to a tender or exchange offer, or exercising dissenters’ or appraisal rights. (2) State actions (A) In general Notwithstanding any other provision of this section, nothing in this section may be construed to preclude a State or political subdivision thereof or a State pension plan from bringing an action involving a covered security on its own behalf, or as a member of a class comprised solely of other States, po- litical subdivisions, or State pension plans that are named plaintiffs, and that have au- thorized participation, in such action. (B) ‘‘State pension plan’’ defined For purposes of this paragraph, the term ‘‘State pension plan’’ means a pension plan established and maintained for its employ- ees by the government of the State or polit- ical subdivision thereof, or by any agency or instrumentality thereof. (3) Actions under contractual agreements be- tween issuers and indenture trustees Notwithstanding subsection (b) or (c), a cov- ered class action that seeks to enforce a con- tractual agreement between an issuer and an indenture trustee may be maintained in a State or Federal court by a party to the agree- ment or a successor to such party. (4) Remand of removed actions In an action that has been removed from a State court pursuant to subsection (c), if the Federal court determines that the action may