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The Scope Of Liability Under Section 12 Of The Securities Act Of 1933: "Participation" And The Pertinent Legislative Materials, Douglas E. Abrams
The Scope Of Liability Under Section 12 Of The Securities Act Of 1933: "Participation" And The Pertinent Legislative Materials, Douglas E. Abrams
Fordham Urban Law Journal
The Securities Act of 1933 creates two private rights of action. Since 1971, seven circuits have adopted the "participation" theory, imposing section 12 liability not only on the transferor, but also on any person whose participation in the transaction is substantial in causing the transaction to occur. This article traces the development of the participation theory. The author argues that limiting section 12 liability to the transferor would significantly diminish the protections afforded by the act and that the scope of the act should be reexamined by Congress rather than determined by judicial interpretation. Finally, in light of his thesis, …
The Misappropriation Theory: Rule 10b-5 Insider Liability For Nonfiduciary Breach, Elliot Brecher
The Misappropriation Theory: Rule 10b-5 Insider Liability For Nonfiduciary Breach, Elliot Brecher
Fordham Urban Law Journal
This note traces the history of rule 10b-5 and its expansion and restriction in judicial decisions. The note goes on to discuss United States v. Carpenter, a Second Circuit case that drastically expands insider trading liability. The author agues that the misappropriation theory is outside of the statutory purpose of 10b-5 and that extending the provisions to reach insider trading goes beyond the premises of statutory construction articulated by the Court.