Chapter 24
Federal Securities Acts and Areas of Expert Analysis
24.1 Introduction
This chapter discusses areas of expert analysis arising from cases involving alleged violations of the Federal Securities Acts. We first provide a brief summary of portions of the acts that an economic expert will find relevant. Next, we review legal measures of damages prescribed by these acts and case law. Finally, we discuss three areas in which economic experts often provide analysis: the event study, the but-for price or true-value line, and aggregate damages estimation.
24.2 Federal Securities Acts
The Securities Act of 1933,1 the Securities Exchange Act of 1934,2 and the Private Securities Litigation Reform Act of 19953 constitute the federal regulatory instruments of interstate securities transactions. These laws attempt to ensure that the investing public has sufficient information to enable it to rely on the integrity of the securities market while also protecting securities issuers against abusive litigation.
(a) Securities Act of 1933
The 1933 act regulates the registration requirements and initial distribution of a security.
(i) Section 11: Civil Liabilities on Account of False Registration Statement
Section 11 provides cause of action to a security's purchaser if the issuer's registration statement falsifies or omits a material fact.4 A material fact is any information a rational investor would use to make a well-informed investment decision. ...
