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 Securities Lawyer's Deskbook
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Securities Exchange Act of 1934





Section 20 -- Liabilities of Controlling Persons and Persons Who Aid and Abet Violations


  1. Joint and several liability; good faith defense

    Every person who, directly or indirectly, controls any person liable under any provision of this title or of any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.

  2. Unlawful activity through or by means of any other person

    It shall be unlawful for any person, directly or indirectly, to do any act or thing which it would be unlawful for such person to do under the provisions of this title or any rule or regulation thereunder through or by means of any other person.

  3. Hindering, delaying, or obstructing the making or filing of any document, report, or information

    It shall be unlawful for any director or officer of, or any owner of any securities issued by, any issuer required to file any document, report, or information under this title or any rule or regulation thereunder without just cause to hinder, delay, or obstruct the making or filing of any such document, report, or information.

  4. Liability for trading in securities while in possession of material nonpublic information

    Wherever communicating, or purchasing or selling a security while in possession of, material nonpublic information would violate, or result in liability to any purchaser or seller of the security under any provisions of this title, or any rule or regulation thereunder, such conduct in connection with a purchase or sale of a put, call, straddle, option, privilege or security-based swap agreement (as defined in section 206B of the Gramm-Leach- Bliley Act) with respect to such security or with respect to a group or index of securities including such security, shall also violate and result in comparable liability to any purchaser or seller of that security under such provision, rule, or regulation.

  5. Prosecution of persons who aid and abet violations

    For purposes of any action brought by the Commission under paragraph (1) or (3) of section 21(d), any person that knowingly provides substantial assistance to another person in violation of a provision of this title, or of any rule or regulation issued under this title, shall be deemed to be in violation of such provision to the same extent as the person to whom such assistance is provided.

  6. Limitation

    The authority of the Commission under this section with respect to security- based swap agreements (as defined in section 206B of the Gramm-Leach-Bliley Act) shall be subject to the restrictions and limitations of section 3A(b).


Legislative History


June 6, 1934, c. 404, Title I, § 20, 48 Stat. 899; May 27, 1936, c. 462, § 6, 49 Stat. 1379; Aug. 20, 1964, Pub.L. 88-467, § 9, 78 Stat. 579; Aug. 10, 1984, Pub.L. 98-376, § 5, 98 Stat. 1265; Dec. 22, 1995, Pub.L. 104-67, Title I, § 104, 109 Stat. 757; Nov. 3, 1998, Pub.L. 105-353, Title III, § 301(b)(12), 112 Stat. 3236; Dec. 21, 2000, Pub.L. 106-554, § 1(a)(5), 114 Stat. 2763.

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