§ 2.9.5.4

• Jurisdiction: Arizona

§ 2.9.5.4 The Final Drafting Process

By the end of 1949, a preliminary draft of the bill was finished. After that, Hastings presented the bill for study and comment by the Securities Committee and other interested parties.

Reports on the bill's drafting were sent to the Corporation Commission during what Hastings summarized as "days of discussion, unlimited contribution of time by the Special Securities Advisory Committee and legal counsel of firms and individuals interested in the effects of such legislation."³⁷⁸ The resulting new ideas can be fully appreciated only by carefully comparing the preliminary draft with the final bill.³⁷⁹

A notable example is the participate-or-induce standard for civil liability in § 17(C) of the final bill (now codified in A.R.S. § 44-2003(A)).³⁸⁰ This provision did not exist in the preliminary draft. It was developed during the study-and-comment process. It extends civil liability beyond sellers to all persons who make, participate in, or induce an unlawful sale.³⁸¹ It is a unique statute that has neither a federal nor state counterpart.³⁸² Its meaning and application are debated even today and are among the most litigated issues in civil litigation.³⁸³

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Notes:

^[378] Ariz. Corp. Comm'n, Securities Division Condensed Annual Report 38th Fiscal Year 4-5 (Sept. 1, 1950).

^[379] Copies of the 1949 draft and the 1951 session laws are...