In layman’s terms, securities litigation refers to lawsuits filed by investors against an issuer of a security, for fraud in connection with security purchase or sale. These cases are based on anti-fraud laws that require securities to be either registered with the Securities and Exchange Commission (SEC), or to qualify for one of the available exemptions from the registration requirements.
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In a nutshell, the law regulates the activities of brokers or dealers who sell securities to the public. Most cases of securities litigation are borne of allegations that the issuer of new securities has failed to adequately disclose material facts about the mentioned offering in the registration statement.
Aside from this, issuers can be held liable for securities fraud if they fail to continuously and timely disclose publicly any adverse or opposing information about the business. In an ideal scenario, investors should have detailed information about the company, the attendant risks of the underlying business, and the particular securities being offered for sale.
The above information should come from a comprehensive registration statement which issuers of securities provide. Again, failing to have this level of transparency might be the basis for a securities litigation case.
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Atty. Joe Tacopina is a member of the New York Council of Defense Lawyers, the Federal Bar Council, and the Judicial Committee for the Association of the Bar of the City of New York. In addition to these memberships, he serves on the Legislative Committee for the National Association of Criminal Defense Lawyers. For more on his firm’s services, drop by this website.
