Deconstructing Section 11: Public Offering Liability in a Continuous Disclosure Environment

Abstract:     
This paper considers whether the prevailing liability structure under Section 11 of the Securities Act of 1933 makes sense as applied to large capitalization issuers. This, in turn, requires an evaluation of whether the alternative structure for liability, that under Rule 10b-5 and the periodic disclosure requirements of the Securities Exchange Act of 1934, is sufficient or deficient in terms of promoting adequate disclosure. The paper suggests some fine-tuning under the '34 Act designed to bring better external certification, particularly by accountants, into the picture. More radical reforms are justified under the '33 Act, including the essential abandonment of underwriter due diligence liability.

Number of Pages in PDF File: 30

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