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Liability Under the Securities Act of 1933

Cite this article as: Jason Mance Gordon, "Liability Under the Securities Act of 1933," in The Business Professor, updated January 14, 2015, last accessed April 8, 2020, https://thebusinessprofessor.com/knowledge-base/liability-under-the-securities-exchange-act-of-1933/.

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LIABILITY UNDER THE SECURITIES ACT OF 1933

The 1933 Act provides for both criminal and civil liability for individuals who violate its provisions in the issuance of securities. Civil liability generally arises when a purchaser of securities sues the issuer (or its agent) for failure to comply with the registration or applicable exemption requirements under the ’33 Act. This often includes (unintentionally) failing to make or making incomplete or erroneous disclosures of material information to purchasers of securities. Criminal liability generally arises when an issuer (or its agent) willfully violates the securities laws in a manner that defrauds or deceives a purchaser of securities. Remedies for civil and criminal violation range from the ability to recuperate the amount paid for the securities to fines and imprisonment.

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