Law Commons^™

Texas Annual Survey: Securities Regulation, George Lee Flint Jr

Faculty Articles

The Fifth Circuit’s determination of a passive investor’s equity interest in a limited liability company as “securities” brings this class of investors under the protection of the Texas Securities Act (“TSA”). The TSA recognizes vicarious liability theories of aiding and abetting liability and control person liability, which hold secondary parties accountable for their actions. During the Survey period, several cases found secondary parties with positions of control or who met the elements of common law fraud culpable. In Fernea v. Merrill Lynch Pierce Fenner & Smith, Inc., the court found that a business could be liable for an employee’s actions …