15 U.S.C. § 77j — Information required in prospectus

Page 147 TITLE 15—COMMERCE AND TRADE § 77j (i) the act or omission described in para- graph (1) involved fraud, deceit, manipula- tion, or deliberate or reckless disregard of a regulatory requirement; and (ii) such act or omission directly or indi- rectly resulted in— (I) substantial losses or created a sig- nificant risk of substantial losses to other persons; or (II) substantial pecuniary gain to the person who committed the act or omis- sion. (3) Evidence concerning ability to pay In any proceeding in which the Commission may impose a penalty under this section, a re- spondent may present evidence of the ability of the respondent to pay such penalty. The Commission may, in its discretion, consider such evidence in determining whether such penalty is in the public interest. Such evi- dence may relate to the extent of the ability of the respondent to continue in business and the collectability of a penalty, taking into ac- count any other claims of the United States or third parties upon the assets of the respondent and the amount of the assets of the respond- ent. (May 27, 1933, ch. 38, title I, § 8A, as added Pub. L. 101–429, title I, § 102, Oct. 15, 1990, 104 Stat. 933; amended Pub. L. 107–204, title XI, § 1105(b), July 30, 2002, 116 Stat. 809; Pub. L. 111–203, title IX, § 929P(a)(1), July 21, 2010, 124 Stat. 1862.) Editorial Notes AMENDMENTS 2010—Subsec. (g). Pub. L. 111–203 added subsec. (g). 2002—Subsec. (f). Pub. L. 107–204 added subsec. (f). 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. EFFECTIVE DATE Section effective Oct. 15, 1990, with provisions relat- ing to civil penalties and accounting and disgorgement, see section 1(c)(1) and (2) of Pub. L. 101–429, set out in an Effective Date of 1990 Amendment note under sec- tion 77g of this title. § 77i. Court review of orders (a) Any person aggrieved by an order of the Commission may obtain a review of such order in the court of appeals of the United States, within any circuit wherein such person resides or has his principal place of business, or in the United States Court of Appeals for the District of Columbia, by filing in such Court, within sixty days after the entry of such order, a writ- ten petition praying that the order of the Com- mission be modified or be set aside in whole or in part. A copy of such petition shall be forth- with transmitted by the clerk of the court to the Commission, and thereupon the Commission shall file in the court the record upon which the order complained of was entered, as provided in section 2112 of title 28. No objection to the order of the Commission shall be considered by the court unless such objection shall have been urged before the Commission. The finding of the Commission as to the facts, if supported by evi- dence, shall be conclusive. If either party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court that such additional evidence is mate- rial and that there were reasonable grounds for failure to adduce such evidence in the hearing before the Commission, the court may order such additional evidence to be taken before the Commission and to be adduced upon the hearing in such manner and upon such terms and condi- tions as to the court may seem proper. The Commission may modify its findings as to the facts, by reason of the additional evidence so taken, and it shall file such modified or new findings, which, if supported by evidence, shall be conclusive, and its recommendation, if any, for the modification or setting aside of the origi- nal order. The jurisdiction of the court shall be exclusive and its judgment and decree, affirm- ing, modifying, or setting aside, in whole or in part, any order of the Commission, shall be final, subject to review by the Supreme Court of the United States upon certiorari or certifi- cation as provided in section 1254 of title 28. (b) The commencement of proceedings under subsection (a) shall not, unless specifically or- dered by the court, operate as a stay of the Com- mission’s order. (May 27, 1933, ch. 38, title I, § 9, 48 Stat. 80; Pub. L. 85–791, § 9, Aug. 28, 1958, 72 Stat. 945; Pub. L. 100–181, title II, § 206, Dec. 4, 1987, 101 Stat. 1252.) Editorial Notes AMENDMENTS 1987—Subsec. (a). Pub. L. 100–181 substituted ‘‘court of appeals’’ for ‘‘Circuit Court of Appeals’’, ‘‘United States Court of Appeals for the District of Columbia, by filing in such Court’’ for ‘‘Court of Appeals of the District of Columbia, by filing in such court’’, and ‘‘sec- tion 1254 of title 28’’ for ‘‘sections 239 and 240 of the Ju- dicial Code, as amended (U.S.C., title 28, secs. 346 and 347)’’. 1958—Subsec. (a). Pub. L. 85–791, in second sentence, substituted ‘‘transmitted by the clerk of the court to’’ for ‘‘served upon’’, struck out ‘‘certify and’’ before ‘‘file in the court’’, struck out ‘‘a transcript of’’ after ‘‘file in the court’’, and inserted ‘‘as provided in section 2112 of title 28’’. 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. § 77j. Information required in prospectus (a) Information in registration statement; docu- ments not required Except to the extent otherwise permitted or required pursuant to this subsection or sub- sections (c), (d), or (e)— (1) a prospectus relating to a security other than a security issued by a foreign govern- ment or political subdivision thereof, shall Page 148 TITLE 15—COMMERCE AND TRADE § 77j contain the information contained in the reg- istration statement, but it need not include the documents referred to in paragraphs (28) to (32), inclusive, of schedule A of section 77aa of this title; (2) a prospectus relating to a security issued by a foreign government or political subdivi- sion thereof shall contain the information contained in the registration statement, but it need not include the documents referred to in paragraphs (13) and (14) of schedule B of sec- tion 77aa of this title; (3) notwithstanding the provisions of para- graphs (1) and (2) of this subsection when a prospectus is used more than nine months after the effective date of the registration statement, the information contained therein shall be as of a date not more than sixteen months prior to such use, so far as such infor- mation is known to the user of such pro- spectus or can be furnished by such user with- out unreasonable effort or expense; (4) there may be omitted from any pro- spectus any of the information required under this subsection which the Commission may by rules or regulations designate as not being necessary or appropriate in the public interest or for the protection of investors. (b) Summarizations and omissions allowed by rules and regulations In addition to the prospectus permitted or re- quired in subsection (a), the Commission shall by rules or regulations deemed necessary or ap- propriate in the public interest or for the pro- tection of investors permit the use of a pro- spectus for the purposes of subsection (b)(1) of section 77e of this title which omits in part or summarizes information in the prospectus speci- fied in subsection (a). A prospectus permitted under this subsection shall, except to the extent the Commission by rules or regulations deemed necessary or appropriate in the public interest or for the protection of investors otherwise pro- vides, be filed as part of the registration state- ment but shall not be deemed a part of such reg- istration statement for the purposes of section 77k of this title. The Commission may at any time issue an order preventing or suspending the use of a prospectus permitted under this sub- section, if it has reason to believe that such pro- spectus has not been filed (if required to be filed as part of the registration statement) or in- cludes any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the cir- cumstances under which such prospectus is or is to be used, not misleading. Upon issuance of an order under this subsection, the Commission shall give notice of the issuance of such order and opportunity for hearing by personal service or the sending of confirmed telegraphic notice. The Commission shall vacate or modify the order at any time for good cause or if such pro- spectus has been filed or amended in accordance with such order. (c) Additional information required by rules and regulations Any prospectus shall contain such other infor- mation as the Commission may by rules or regu- lations require as being necessary or appropriate in the public interest or for the protection of in- vestors. (d) Classification of prospectuses In the exercise of its powers under subsections (a), (b), or (c), the Commission shall have au- thority to classify prospectuses according to the nature and circumstances of their use or the na- ture of the security, issue, issuer, or otherwise, and, by rules and regulations and subject to such terms and conditions as it shall specify therein, to prescribe as to each class the form and contents which it may find appropriate and consistent with the public interest and the pro- tection of investors. (e) Information in conspicuous part of pro- spectus The statements or information required to be included in a prospectus by or under authority of subsections (a), (b), (c), or (d), when written, shall be placed in a conspicuous part of the pro- spectus and, except as otherwise permitted by rules or regulations, in type as large as that used generally in the body of the prospectus. (f) Prospectus consisting of radio or television broadcast In any case where a prospectus consists of a radio or television broadcast, copies thereof shall be filed with the Commission under such rules and regulations as it shall prescribe. The Commission may by rules and regulations re- quire the filing with it of forms and prospectuses used in connection with the offer or sale of securities registered under this sub- chapter. (May 27, 1933, ch. 38, title I, § 10, 48 Stat. 81; June 6, 1934, ch. 404, title II, § 205, 48 Stat. 906; Aug. 10, 1954, ch. 667, title I, § 8, 68 Stat. 685.) Editorial Notes AMENDMENTS 1954—Act Aug. 10, 1954, complemented changes in sec- tion 77e of this title by act Aug. 10, 1954, permitted of- fering activities in the waiting period and in so doing rearranged the sequence of the subsections, added new text contained in subsec. (b), and renumbered subsecs. (c) and (d) as (e) and (f), respectively. 1934—Subsec. (b)(1). Act June 6, 1934, amended par. (1). Statutory Notes and Related Subsidiaries 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. 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. Page 149 TITLE 15—COMMERCE AND TRADE § 77k § 77k. Civil liabilities on account of false registra- tion statement (a) Persons possessing cause of action; persons liable In case any part of the registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, any person acquiring such security (unless it is proved that at the time of such acquisition he knew of such un- truth or omission) may, either at law or in eq- uity, in any court of competent jurisdiction, sue— (1) every person who signed the registration statement; (2) every person who was a director of (or person performing similar functions) or part- ner in the issuer at the time of the filing of the part of the registration statement with re- spect to which his liability is asserted; (3) every person who, with his consent, is named in the registration statement as being or about to become a director, person per- forming similar functions, or partner; (4) every accountant, engineer, or appraiser, or any person whose profession gives authority to a statement made by him, who has with his consent been named as having prepared or cer- tified any part of the registration statement, or as having prepared or certified any report or valuation which is used in connection with the registration statement, with respect to the statement in such registration statement, re- port, or valuation, which purports to have been prepared or certified by him; (5) every underwriter with respect to such security. If such person acquired the security after the issuer has made generally available to its secu- rity holders an earning statement covering a pe- riod of at least twelve months beginning after the effective date of the registration statement, then the right of recovery under this subsection shall be conditioned on proof that such person acquired the security relying upon such untrue statement in the registration statement or rely- ing upon the registration statement and not knowing of such omission, but such reliance may be established without proof of the reading of the registration statement by such person. (b) Persons exempt from liability upon proof of issues Notwithstanding the provisions of subsection (a) no person, other than the issuer, shall be lia- ble as provided therein who shall sustain the burden of proof— (1) that before the effective date of the part of the registration statement with respect to which his liability is asserted (A) he had re- signed from or had taken such steps as are per- mitted by law to resign from, or ceased or re- fused to act in, every office, capacity, or rela- tionship in which he was described in the reg- istration statement as acting or agreeing to act, and (B) he had advised the Commission and the issuer in writing that he had taken such action and that he would not be respon- sible for such part of the registration state- ment; or (2) that if such part of the registration state- ment became effective without his knowledge, upon becoming aware of such fact he forthwith acted and advised the Commission, in accord- ance with paragraph (1) of this subsection, and, in addition, gave reasonable public notice that such part of the registration statement had become effective without his knowledge; or (3) that (A) as regards any part of the reg- istration statement not purporting to be made on the authority of an expert, and not pur- porting to be a copy of or extract from a re- port or valuation of an expert, and not pur- porting to be made on the authority of a pub- lic official document or statement, he had, after reasonable investigation, reasonable ground to believe and did believe, at the time such part of the registration statement be- came effective, that the statements therein were true and that there was no omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and (B) as regards any part of the registration statement purporting to be made upon his authority as an expert or purporting to be a copy of or extract from a report or valuation of himself as an expert, (i) he had, after reasonable investigation, reason- able ground to believe and did believe, at the time such part of the registration statement became effective, that the statements therein were true and that there was no omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) such part of the registration statement did not fairly represent his statement as an expert or was not a fair copy of or extract from his report or valuation as an expert; and (C) as regards any part of the registration statement purporting to be made on the authority of an expert (other than him- self) or purporting to be a copy of or extract from a report or valuation of an expert (other than himself), he had no reasonable ground to believe and did not believe, at the time such part of the registration statement became ef- fective, that the statements therein were un- true or that there was an omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that such part of the registra- tion statement did not fairly represent the statement of the expert or was not a fair copy of or extract from the report or valuation of the expert; and (D) as regards any part of the registration statement purporting to be a statement made by an official person or pur- porting to be a copy of or extract from a pub- lic official document, he had no reasonable ground to believe and did not believe, at the time such part of the registration statement became effective, that the statements therein were untrue, or that there was an omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that such part of the registration statement did not fairly rep- resent the statement made by the official per-