§ 5.1.2.1 RESPONDEAT SUPERIOR

• Jurisdiction: Arizona

§ 5.1.2.1 Respondeat Superior

Express provision for respondeat-superior liability does not exist under the federal or Arizona securities statutes.¹⁷¹⁸ Despite this, most courts have assumed the applicability of the doctrine.¹⁷¹⁹ In the aftermath of the U.S. Supreme Court's decision eliminating aiding-and-abetting liability under Rule 10b-5,¹⁷²⁰ a few federal courts concluded that respondeat superior was no longer viable.¹⁷²¹ But a consensus now exists that Central Bank did not eliminate respondeat-superior liability.¹⁷²²

Liability on the basis of respondeat superior finds support in the Arizona Securities Act's savings clause, which provides that the securities laws do not "limit any statutory or common law right of any person in any court for any act involved in the sale of securities."¹⁷²³ This language weighs against any legislative intent to preempt common-law agency.¹⁷²⁴ It is hard to imagine what policy considerations would motivate law makers to eliminate respondeat-superior liability. If respondeat superior was somehow preempted, "the securities industry alone¾which Congress thought required special oversight to protect the public¾would be singled out for favored treatment over all [other] persons treated as principals by the law of agency."¹⁷²⁵

--------

Notes:

^[1718]See Central Bank v. First Interstate Bank, 511 U.S. 164, 200 & n.12 (1994) (Stevens, J., dissenting) (observing that while many courts have imposed secondary liability in Rule 10b-5 actions based upon respondeat...