Defense Strategies under the Securities Act

Summary

This practice note provides strategies to defeat securities fraud claims under Section 11 (15 U.S.C. § 77k) of the Securities Act of 1933, as amended (Securities Act). Section 11 imposes strict liability on issuers and signatories and negligence liability on underwriters if, at the time a registration statement became effective, the statement either contained an untrue statement of a material fact or omitted to state a material fact required to make the registration statement not misleading. A plaintiff must show that it purchased securities in the offering or securities traceable to the offering. This note maps defense strategies including (1) investigating a securities fraud complaint when it is filed and initial steps, (2) coordinating multiple complaints filed in state and federal courts, (3) preparing motions to dismiss, (4) discovery and expert witnesses, (5) challenges to class certification, (6) potential motions for summary judgment, and (7) preparing for trial.