LAW 3111H Study Guide - Midterm Guide: Strict Liability, Rescission, Scienter
Document Summary
Liability for not complying with registration rules: If seller/offeror violates rules, purchaser can rescind investment thus disincentivizing bad behavior/ lying. Stmt has a materially fraudulent statement, purchaser can recover damages, and the fraudulent statement may result in the ability to rescind the investment. Sec can seek injunctions & issue admin cease and desist orders. Criminal penalties for willful violation of securities act include five years in prison and. One may recover from the corporation and any person (individual/corporation) that controls any other person who was liable. One who makes a mate(cid:401)ial mis(cid:401)ep(cid:401)esentation is lia(cid:267)le (cid:306)o(cid:401) the losses (cid:268)aused (cid:267)y othe(cid:401)"s justifiable reliance. Pie(cid:268)e o(cid:306) in(cid:306)o that (cid:453)ould"(cid:452)e (cid:267)een impo(cid:401)tant to pe(cid:401)son makin(cid:307) the de(cid:268)ision. Scienter (culpability usually intent or knowledge) either intentionally did the crime or knowingly did the crime. Reliance (must have actually justifiably relied) fraudulent stmt had to be used by victim. Whatever fraud is, it must have caused what issue is.
