15 U.S.C. § 77l — Civil liabilities arising in connection with

Page 151 TITLE 15—COMMERCE AND TRADE § 77n such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title. § 77l. Civil liabilities arising in connection with prospectuses and communications (a) In general Any person who— (1) offers or sells a security in violation of section 77e of this title, or (2) offers or sells a security (whether or not exempted by the provisions of section 77c of this title, other than paragraphs (2) and (14) of subsection (a) of said section), by the use of any means or instruments of transportation or communication in interstate commerce or of the mails, by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading (the purchaser not knowing of such untruth or omission), and who shall not sustain the bur- den of proof that he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission, shall be liable, subject to subsection (b), to the person purchasing such security from him, who may sue either at law or in equity in any court of competent jurisdiction, to recover the consid- eration paid for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if he no longer owns the security. (b) Loss causation In an action described in subsection (a)(2), if the person who offered or sold such security proves that any portion or all of the amount re- coverable under subsection (a)(2) represents other than the depreciation in value of the sub- ject security resulting from such part of the pro- spectus or oral communication, with respect to which the liability of that person is asserted, not being true or omitting to state a material fact required to be stated therein or necessary to make the statement not misleading, then such portion or amount, as the case may be, shall not be recoverable. (May 27, 1933, ch. 38, title I, § 12, 48 Stat. 84; Aug. 10, 1954, ch. 667, title I, § 9, 68 Stat. 686; Pub. L. 104–67, title I, § 105, Dec. 22, 1995, 109 Stat. 757; Pub. L. 106–554, § 1(a)(5) [title II, § 208(a)(3)], Dec. 21, 2000, 114 Stat. 2763, 2763A–435.) Editorial Notes AMENDMENTS 2000—Subsec. (a)(2). Pub. L. 106–554 substituted ‘‘para- graphs (2) and (14)’’ for ‘‘paragraph (2)’’. 1995—Pub. L. 104–67 designated existing provisions as subsec. (a), inserted heading, inserted ‘‘, subject to sub- section (b),’’ after ‘‘shall be liable’’ in concluding provi- sions, and added subsec. (b). 1954—Act Aug. 10, 1954, inserted ‘‘offers or’’ before ‘‘sells’’ in pars. (1) and (2). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1995 AMENDMENT Pub. L. 104–67, title I, § 108, Dec. 22, 1995, 109 Stat. 758, provided that: ‘‘The amendments made by this title [enacting sections 77z–1, 77z–2, 78u–4, and 78u–5 of this title and amending this section and sections 77t, 78o, 78t, and 78u of this title and section 1964 of Title 18, Crimes and Criminal Procedure] shall not affect or apply to any private action arising under title I of the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.] or title I of the Securities Act of 1933 [15 U.S.C. 77a et seq.], commenced before and pending on the date of en- actment of this Act [Dec. 22, 1995].’’ EFFECTIVE DATE OF 1954 AMENDMENT Amendment by act Aug. 10, 1954, effective 60 days after Aug. 10, 1954, see note under section 77b of this title. CONSTRUCTION OF 1995 AMENDMENT Nothing in amendment by Pub. L. 104–67 to be deemed to create or ratify any implied right of action, or to prevent Commission, by rule or regulation, from re- stricting or otherwise regulating private actions under Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), see section 203 of Pub. L. 104–67, set out as a Construc- tion note under section 78j–1 of this title. § 77m. Limitation of actions No action shall be maintained to enforce any liability created under section 77k or 77l(a)(2) of this title unless brought within one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable dili- gence, or, if the action is to enforce a liability created under section 77l(a)(1) of this title, un- less brought within one year after the violation upon which it is based. In no event shall any such action be brought to enforce a liability cre- ated under section 77k or 77l(a)(1) of this title more than three years after the security was bona fide offered to the public, or under section 77l(a)(2) of this title more than three years after the sale. (May 27, 1933, ch. 38, title I, § 13, 48 Stat. 84; June 6, 1934, ch. 404, title II, § 207, 48 Stat. 908; Pub. L. 105–353, title III, § 301(a)(3), Nov. 3, 1998, 112 Stat. 3235.) Editorial Notes AMENDMENTS 1998—Pub. L. 105–353 substituted ‘‘77l(a)(2)’’ for ‘‘77l(2)’’ in two places and ‘‘77l(a)(1)’’ for ‘‘77l(1)’’ in two places. 1934—Act June 6, 1934, substituted ‘‘one year’’ for ‘‘two years’’, ‘‘three years’’ for ‘‘ten years’’, and in- serted ‘‘or under section 77l(2) of this title more than three years after the sale’’. § 77n. Contrary stipulations void Any condition, stipulation, or provision bind- ing any person acquiring any security to waive compliance with any provision of this sub- chapter or of the rules and regulations of the Commission shall be void. (May 27, 1933, ch. 38, title I, § 14, 48 Stat. 84.) Executive Documents TRANSFER OF FUNCTIONS For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title.