Defenses in Section 11 and 12 of Securities Actions

The video tutorial discusses the defenses available to issuers of securities when they fail to comply with registration requirements, focusing on Section 11 and Section 12 of the 1933 Act. It outlines four main defenses: materiality, statute of limitations, due diligence, and negative causation. The materiality defense argues that any failure to disclose was not significant enough to affect an investor's decision. The statute of limitations defense is based on the time limit for bringing an action. The due diligence defense requires issuers to show they exercised reasonable care in verifying information. Lastly, the negative causation defense claims that any misstatement or omission did not cause the investor's loss.

What is the primary focus of the defenses available to securities issuers under Section 11 or Section 12 of the 33 Act?

• To enhance investor relations

• To ensure compliance with tax regulations

• To counter claims of non-compliance with registration requirements

• To avoid penalties for insider trading

Which defense argues that a misstatement or omission was not significant enough to influence an investor's decision?

• Negative causation defense

• Due diligence defense

• Statute of limitations defense

• Materiality defense

What does the statute of limitations defense rely on?

• The issuer's intent to comply

• The expertise of the issuer

• The expiration of the legal time frame to bring a claim

• The materiality of the misstatement

How does the due diligence defense protect an issuer?

• By highlighting the issuer's market reputation

• By demonstrating the issuer's financial stability

• By showing the issuer exercised reasonable care in verifying information

• By proving the issuer had no knowledge of the misstatement

What is the key argument in the negative causation defense?

• The issuer's misstatement was intentional

• The issuer had no control over the market conditions

• The issuer's financial statements were audited

• The loss was due to factors unrelated to the issuer's actions