6.6 Liabilities Under the Federal Securities Laws

• Library: Corporations and Partnerships in Virginia (Virginia CLE) (2016 Ed.)

6.6 LIABILITIES UNDER THE FEDERAL SECURITIES LAWS

Federal securities laws impose substantial duties on directors and officers in addition to those arising under state law. These duties principally relate to disclosure practices applicable to securities registrations and transactions involving corporations and their controlling persons. Securities laws are complex and sometimes receive inconsistent interpretations from different federal courts. Directors and officers must comply with the various rules in order to avoid often staggering liabilities.

Federal securities laws are designed to protect the interests of investors and the public through certain requirements for disclosure of information and prohibitions against fraudulent and manipulative practices. The two primary statutes, each of which is discussed below, are the Securities Act of 1933 and the Securities Exchange Act of 1934. Other statutes that have a bearing on securities laws, but that are not within the scope of this

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chapter, include the Trust Indenture Act of 1939, ¹²² the Investment Company Act of 1940, ¹²³ and the Investment Advisor's...