§ 5.1 SECURITIES VIOLATIONS

• Jurisdiction: Arizona

§ 5.1 Securities Violations

Securities law distinguishes between primary and secondary liability.¹⁴⁸⁸ Primary liability arises when an actor's own conduct, without regard for that of anyone else, is culpable. Secondary liability is derivative liability in which the secondary party's status or interaction with the primary wrongdoer renders the secondary actor jointly liable with the primary violator.

The range of primary and secondary liability under § 44-1991(A) is considerably broader than that under Rule 10b-5. Primary liability for violations of § 44-1991(A) extends by statute not only to those who directly misrepresent or mislead, but to all persons who make, participate in, or induce a prohibited sale.¹⁴⁸⁹ Secondary liability under Arizona's securities statutes may also be established under respondeat-superior,¹⁴⁹⁰ indirect-fraud,¹⁴⁹¹ and controlling-person liability.¹⁴⁹² Secondary liability under a theory known as the responsible-corporate-officer doctrine is also possible.¹⁴⁹³

In the federal courts, a...