Securities Laws: The Exclusivity of the Private Right of Action under Section 18 of the 1934 Act and Its Relationshp to Rule 10b-5
Ross v. A.H. Robins, 607 F.2d 545 (2d Cir. 1979), cert. denied, 446 U.S. 946 (1980).
The issue resolved in Ross v. A.H. Robins concerns the viability of an action filed under section 10(b) of the Securities Exchange Act of 1934 and rule l0b-5 when section 18 of the same Act contains an express civil remedy. Section 18 imposes liability for making “any statement in any … document filed …; which statement was... false and misleading with respect to any material fact” to one who relies upon such statement and purchases or sells securities at a price affected by the statement. Section 10(b) and rule l0b-5 make it “unlawful for any person, … to make any untrue statement of a material fact or to omit to state a material fact … in connection with the purchase or sale of any security.”
To decide this issue the Second Circuit Court of Appeals first examined the legislative history of the 1933 and 1934 Securities Exchange Acts. The court also examined the differences between the two sections to determine the exclusivity of section 18. The court concluded that section 18 did not provide an exclusive remedy. Thus section 10(b) and rule l0b-5 could be used. Finally, the court examined rule 9(b), of the Federal Rules of Civil Procedure to determine the sufficiency of the pleadings of the plaintiffs.
"Securities Laws: The Exclusivity of the Private Right of Action under Section 18 of the 1934 Act and Its Relationshp to Rule 10b-5,"
University of Dayton Law Review: Vol. 7:
1, Article 11.
Available at: https://ecommons.udayton.edu/udlr/vol7/iss1/11