Plain-English summary
To sue under Section 11, plaintiffs must have bought the securities issued under the challenged registration statement
The Court unanimously held that to bring a claim under Section 11 of the Securities Act of 1933, a plaintiff must have purchased the "such security" issued under the registration statement alleged to be misleading. The Ninth Circuit’s judgment was vacated and the case remanded for further proceedings.
Why this matters
This decision limits who can bring claims under Section 11, narrowing investor plaintiffs to those who actually bought the securities tied to the registration statement alleged to be misleading. That reduces exposure for some issuers and could affect the scope of securities litigation and investor strategies after IPOs and other registered offerings.
Who may feel it
- Investors who buy shares after a company’s registration statement or IPO
- Public companies and their officers who prepare registration statements
- Underwriters and law firms involved in securities offerings
- Securities plaintiffs’ lawyers and defense attorneys
Key questions
- Does “such security” in Section 11 include any shares of the issuer or only the shares issued under the challenged registration statement? (Answered: only shares issued under that registration statement.)