15 U.S.C. § 78t — Liability of controlling persons and persons who aid and abet violations

submitted 92 years ago by ch. 404 to r/title-15-COMMERCE-AND-TRADE · 463 words · no verdicts yet

in plain englishAI-generated · not legal advice

Anyone who controls a rule-breaker is also liable for that violation, unless they acted in good faith. It is illegal to do indirectly what this law bans doing directly. People who knowingly help someone break this law are liable too.

(a) Joint and several liability; good faith defense If a person controls someone else who is liable under this law or its rules — including in an SEC enforcement action brought under section 78u(d)(1) or (3) — the controlling person is also liable, jointly and to the same extent, with the controlled person, to whoever the controlled person is liable to. The controlling person is not liable if they prove they acted in good faith and did not directly or indirectly cause the act or acts that created the violation or claim. (b) Unlawful activity through or by means of any other person It is illegal for anyone, directly or indirectly, to do — through or by means of someone else — anything that this law or its rules would make illegal for that person to do themselves. (c) Hindering, delaying, or obstructing the making or filing of any document, report, or information It is illegal for a director, officer, or securityholder of a company required to file a document, report, or information under this law, without just cause, to hinder, delay, or obstruct the making or filing of that document, report, or information. (d) Liability for trading in securities while in possession of material nonpublic information Wherever communicating, or buying or selling a security while holding material nonpublic information, would violate this law or its rules, or create liability for a buyer or seller of that security, the same rule applies to the same kind of conduct involving a put, call, straddle, option, privilege, or security-based swap agreement tied to that security, or tied to a group or index of securities that includes it — creating the same kind of violation and liability for whoever buys or sells that security. (e) Prosecution of persons who aid and abet violations For purposes of an SEC enforcement action brought under section 78u(d)(1) or (3), anyone who knowingly or recklessly gives substantial help to someone else who is violating this law or its rules is treated as having violated that same provision themselves, to the same extent as the person they helped. (f) Limitation on Commission authority The SEC's authority under this section over security-based swap agreements is limited by the restrictions set out in section 78c-1(b).

the actual law source: uscode.house.gov ↗public domain

(a) Joint and several liability; good faith defense

Every person who, directly or indirectly, controls any person liable under any provision of this chapter or of any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable (including to the Commission in any action brought under paragraph (1) or (3) of section 78u(d) of this title), unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.

(b) Unlawful activity through or by means of any other person

It shall be unlawful for any person, directly or indirectly, to do any act or thing which it would be unlawful for such person to do under the provisions of this chapter or any rule or regulation thereunder through or by means of any other person.

It shall be unlawful for any director or officer of, or any owner of any securities issued by, any issuer required to file any document, report, or information under this chapter or any rule or regulation thereunder without just cause to hinder, delay, or obstruct the making or filing of any such document, report, or information.

(d) Liability for trading in securities while in possession of material nonpublic information

Wherever communicating, or purchasing or selling a security while in possession of, material nonpublic information would violate, or result in liability to any purchaser or seller of the security under any provisions of this chapter, or any rule or regulation thereunder, such conduct in connection with a purchase or sale of a put, call, straddle, option, privilege or security-based swap agreement with respect to such security or with respect to a group or index of securities including such security, shall also violate and result in comparable liability to any purchaser or seller of that security under such provision, rule, or regulation.

(e) Prosecution of persons who aid and abet violations

For purposes of any action brought by the Commission under paragraph (1) or (3) of section 78u(d) of this title, any person that knowingly or recklessly provides substantial assistance to another person in violation of a provision of this chapter, or of any rule or regulation issued under this chapter, shall be deemed to be in violation of such provision to the same extent as the person to whom such assistance is provided.

(f) Limitation on Commission authority

The authority of the Commission under this section with respect to security-based swap agreements shall be subject to the restrictions and limitations of section 78c–1(b) of this title.

Source credit: (June 6, 1934, ch. 404, title I, § 20, 48 Stat. 899; May 27, 1936, ch. 462, § 6, 49 Stat. 1379; Pub. L. 88–467, § 9, Aug. 20, 1964, 78 Stat. 579; Pub. L. 98–376, § 5, Aug. 10, 1984, 98 Stat. 1265; Pub. L. 104–67, title I, § 104, Dec. 22, 1995, 109 Stat. 757; Pub. L. 105–353, title III, § 301(b)(12), Nov. 3, 1998, 112 Stat. 3236; Pub. L. 106–554, § 1(a)(5) [title II, § 205(a)(3), title III, § 303(i), (j)], Dec. 21, 2000, 114 Stat. 2763, 2763A–426, 2763A–456; Pub. L. 111–203, title VII, § 762(d)(6), title IX, §§ 929O, 929P(c), July 21, 2010, 124 Stat. 1761, 1862, 1865.)

history & why it existsrecord from the source credit

1934Enacted · Act of June 6, 1934, ch. 404 · 48 Stat. 899
1936Amended · Act of May 27, 1936, ch. 462 · 49 Stat. 1379
1964Amended · Pub. L. 88-467 · 78 Stat. 579
1984Amended · Pub. L. 98-376 · 98 Stat. 1265
1995Amended · Pub. L. 104-67 · 109 Stat. 757
1998Amended · Pub. L. 105-353 · 112 Stat. 3236
2000Amended · Pub. L. 106-554 · 114 Stat. 2763, 2763
2010Amended · Pub. L. 111-203 · 124 Stat. 1761, 1862, 1865

A history note hasn’t been published yet. The record shows enactment by ch. 404 on 1934-06-06.

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