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A Shaky Future for Securities Act Claims Against Mutual Funds

Securities Regulation Law Journal, Vol. 37, p. 20, Spring 2009

29 Pages Posted: 14 Mar 2009 Last revised: 12 Jul 2010

David M. Geffen

Ropes & Gray LLP

Date Written: March 13, 2009

Abstract

The article considers the liability of mutual fund issuers under Sections 11(a) and 12(a)(2) of the Securities Act of 1933. In a Securities Act Section 11(a) or Section 12(a)(2) action, a plaintiff complains of a materially misleading statement in an issuer's registration statement. The article explains why a mutual fund issuer, by establishing a loss causation defense, should prevail in defending these actions. For a mutual fund, establishing a loss causation defense is straightforward, and a mutual fund can defeat Section 11(a) and Section 12(a)(2) claims at the pleading stage of a lawsuit. In effect, mutual funds and related defendants are largely and, perhaps, wholly insulated from Securities Act Section 11(a) and Section 12(a)(2) claims.

Keywords: Securities Act, 11(a), 12(a)(2), issuer liability, anti-fraud, mutual funds, loss causation

Suggested Citation

Geffen, David M., A Shaky Future for Securities Act Claims Against Mutual Funds (March 13, 2009). Securities Regulation Law Journal, Vol. 37, p. 20, Spring 2009. Available at SSRN: https://ssrn.com/abstract=1359304

David M. Geffen (Contact Author)

Ropes & Gray LLP

800 Boylston Street
Prudential Tower
Boston, MA 02199
United States

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