§ 11-51-604 — Civil liabilities
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(1) Any person who sells a security in violation of
section 11-51-301 is liable to the person buying the security from such seller for the
consideration paid for the security, together with interest at the statutory rate from
the date of payment, costs, and reasonable attorney fees, less the amount of any
income received on the security, upon the tender of the security, or is liable for
damages if the buyer no longer owns the security. Damages are deemed to be the
amount that would be recoverable upon a tender, less the value of the security
when the buyer disposed of it, and interest at the statutory rate from the date of
disposition. No person is liable under this subsection (1) for a violation of section 11-51-301 due solely to a failure to file the prescribed notification of exemption or to
pay the required exemption fee for an exemption under section 11-51-308 (1)(p).
(2) (a) Except as provided in paragraph (b) of this subsection (2), any broker-dealer or sales representative who sells a security in violation of section 11-51-401 is
liable to the person buying the security from such seller for the consideration paid
for the security, together with interest at the statutory rate from the date of
payment, costs, and reasonable attorney fees, less the amount of any income
received on the security, upon the tender of the security, or is liable for damages if
the buyer no longer owns the security. Damages are deemed to be the amount that
would be recoverable upon a tender, less the value of the security when the buyer
disposed of it, and interest at the statutory rate from the date of disposition.
(b) No broker-dealer or sales representative is liable under this subsection
(2) for a sale of a security exempt from registration under section 11-51-307 (1)(g) to
(1)(j) or for a sale of a security in a transaction exempt from registration under
section 11-51-308 (1)(a), (1)(e) to (1)(l), (1)(o), or (1)(p); but this paragraph (b) does not
apply if at the time of such sale:
(I) In the case of a violation of section 11-51-401 arising from the failure of a
broker-dealer to be licensed under this article, such broker-dealer was registered
as a broker-dealer under the federal Securities Exchange Act of 1934, licensed as
a broker-dealer or its equivalent under the laws of another state, or held a limited
license under this article; or
(II) In the case of a violation of section 11-51-401 arising from the failure of a
sales representative to be licensed under this article, such sales representative was
licensed as a sales representative or its equivalent under the laws of another state,
held a limited license under this article, or in connection with such sale was acting
for a broker-dealer which was registered as a broker-dealer under the federal
Securities Exchange Act of 1934, licensed as a broker-dealer or its equivalent
under the laws of another state, or licensed under this article.
(2.5) An investment adviser or investment adviser representative who
violates section 11-51-401 is liable to each person to whom investment advisory
services are provided in violation of such section in an amount equal to the greater
of one thousand dollars or the value of all the benefits derived directly or indirectly
from the relationship or dealings with such person prior to such time as the violation
may be cured, together with interest at the statutory rate from the date of receipt
of such benefits, costs, and reasonable attorney fees.
(2.6) An investment adviser or investment adviser representative who
provides investment advisory services to another person but who recklessly,
knowingly, or with an intent to defraud fails to furnish to that person a written
disclosure statement as required by section 11-51-409.5 is liable to such other
person in an amount equal to one thousand dollars, the value of all benefits derived
directly or indirectly from the relationship or dealings with such person, or for
actual damages suffered by such other person, whichever is greatest, plus interest
at the statutory rate, costs, reasonable attorney fees, or such other legal or
equitable relief as the court may deem appropriate.
(3) Any person who recklessly, knowingly, or with an intent to defraud sells
or buys a security in violation of section 11-51-501 (1) or provides investment
advisory services to another person in violation of section 11-51-501 (5) or (6) is
liable to the person buying or selling such security or receiving such services in
connection with the violation for such legal or equitable relief that the court deems
appropriate, including rescission, actual damages, interest at the statutory rate,
costs, and reasonable attorney fees.
(4) Any person who sells a security in violation of section 11-51-501 (1)(b)(the
buyer not knowing of the untruth or omission) and who does not sustain the burden
of proof that such person did not know, and in the exercise of reasonable care could
not have known, of the untruth or omission is liable to the person buying the
security from such person, who may sue to recover the consideration paid for the
security, together with interest at the statutory rate from the date of payment,
costs, and reasonable attorney fees, less the amount of any income received on the
security, upon the tender of the security, or is liable for damages if the buyer no
longer owns the security. Damages are deemed to be the amount that would be
recoverable upon a tender, less the value of the security when the buyer disposed
of it, and interest at the statutory rate from the date of disposition.
(5) (a) Every person who, directly or indirectly, controls a person liable under
subsection (1), (2), (2.5), (2.6), or (3) of this section is liable jointly and severally with
and to the same extent as such controlled person, unless the controlling person
sustains the burden of proof that such person did not know, and in the exercise of
reasonable care could not have known, of the existence of the facts by reason of
which the liability is alleged to exist.
(b) Every person who, directly or indirectly, controls a person liable under
subsection (3) or (4) of this section is liable jointly and severally with and to the
same extent as such controlled person, unless such controlling person sustains the
burden of proof that such person acted in good faith and did not, directly or
indirectly, induce the act or acts constituting the violation or cause of action.
(c) Any person who knows that another person liable under subsection (3) or
(4) of this section is engaged in conduct which constitutes a violation of section 11-51-501 and who gives substantial assistance to such conduct is jointly and severally
liable to the same extent as such other person.
(6) Any tender specified in this section may be made at any time before entry
of judgment.
(7) Every cause of action under this article survives the death of any
individual who might have been a plaintiff or defendant.
(8) No person may sue under subsection (1), (2), (2.5), or (2.6) or paragraph (a)
of subsection (5) of this section more than two years after the contract of sale, or,
as those provisions pertain to investment advisers, federal covered advisers,
investment adviser representatives, and persons who provide investment advisory
services, more than two years after the date of the violation. No person may sue
under subsection (3) or (4) or paragraph (b) or (c) of subsection (5) of this section
more than three years after the discovery of the facts giving rise to a cause of
action under subsection (3) or (4) of this section or after such discovery should have
been made by the exercise of reasonable diligence and in no event more than five
years after the purchase or sale, or, as those provisions pertain to investment
advisers, federal covered advisers, investment adviser representatives, and persons
who provide investment advisory services, more than five years after the date of the
violation.
(9) No buyer or seller of securities or recipient of investment advice may sue
under this section if:
(a) The buyer or seller of securities or recipient of investment advice
receives, before the action is commenced, documentation of:
(I) An offer stating how liability under this section may arise and fairly
advising the buyer or seller of securities or recipient of investment advice of that
person's rights in connection with the offer and any information necessary,
including financial, to correct any material misrepresentation or omission in the
information that was required by this article to be furnished to the person at the
time of the purchase, sale, or rendering of investment advice;
(II) If the basis for relief under this subsection (9) is for a violation of
subsection (1), (3), or (4) of this section and the person seeking recision is a buyer of
securities:
(A) An offer to repurchase the security for cash, payable on delivery of the
security, in an amount equal to the consideration paid plus interest at the statutory
rate from the date of the purchase less the amount of any income received on the
security; or
(B) If the buyer no longer owns the security, an offer to pay the purchaser,
upon acceptance of the offer, damages in the amount that would be recoverable
upon tender of the security less the value of the security when the buyer disposed
of the security plus interest at the statutory rate from the date of the purchase, in
cash, equal to the damages computed in the manner provided in this subparagraph
(II);
(III) If the basis for relief under this subsection (9) is for a violation of
subsection (1), (3), or (4) of this section and the person seeking recision is a seller of
securities:
(A) An offer to tender the security, on payment by the seller of an amount
equal to the purchase price paid, less income received on the security by the buyer,
and interest at the statutory rate after the date of sale of the security to the buyer;
or
(B) If the buyer no longer owns the security, an offer to pay the seller of the
security upon acceptance of the offer, in cash, damages in the amount of the
difference between the price at which the security was purchased and the value the
security would have had at the time of the purchase in the absence of the buyer's
conduct that may have caused liability and interest at the statutory rate after the
date of sale of the security by the seller to the buyer;
(IV) If the basis for relief under this subsection (9) is a violation of subsection
(2) of this section:
(A) If the person is a buyer, an offer to pay pursuant to subparagraph (II) of
this paragraph (a); or
(B) If the person is a seller of securities, an offer to tender or to pay as
specified in subparagraph (III) of this paragraph (a);
(V) If the basis for relief under this subsection (9) is a violation of subsection
(2.5) of this section, an offer to reimburse, in cash, the consideration paid for the
advice and interest at the statutory rate from the date of the payment;
(VI) If the basis for relief under this subsection (9) is a violation of subsection
(2.6) of this section, an offer to reimburse, in cash, the consideration paid for the
advice, the amount of any actual damages that may have been caused by the
conduct, and interest at the statutory rate from the date of the violation causing the
loss;
(b) The offer pursuant to paragraph (a) of this subsection (9) states that the
offer must be accepted by the buyer or seller of securities or recipient of
investment advice within thirty days after the offer is mailed by the buyer or seller
of securities or recipient of investment advice. The party seeking recision may
request that the securities commissioner authorize a time period for acceptance
that is less than thirty days but not less than three days. The securities
commissioner shall have the authority to grant such change in the acceptance
period.
(c) The offeror has the ability to pay the amount offered or to tender the
security under paragraph (a) of this subsection (9) at the time the offer is made;
(d) The offer pursuant to paragraph (a) of this subsection (9) is delivered to
the buyer or seller of securities or recipient of investment advice, or sent in a
manner that ensures receipt by the buyer or seller of securities or recipient of
investment advice; or
(e) The buyer or seller of securities or recipient of investment advice who
accepts the offer made pursuant to paragraph (a) of this subsection (9) is paid in
accordance with the terms of the offer.
(10) No person who has made or engaged in the performance of any contract
in violation of any provision of this article or any rule or order under this article or
who has acquired any purported right under any such contract with knowledge of
the facts by reason of which the making or performance of any such contract was in
violation may base any suit on the contract.
(11) Any condition, stipulation, or provision binding any person acquiring or
disposing of any security to waive compliance with any provision of this article or
any rule or order under this article is void.
(12) The rights and remedies provided by this article may be pleaded and
proved in the alternative and are in addition to any other rights or remedies that
may exist at law or in equity, but this article does not create any cause of action not
specified in this section or section 11-51-602.
(13) Any person liable under this section may seek and obtain contribution
from other persons liable under this section, directly or indirectly, for the same
violation. Contribution shall be awarded by the court in accordance with the actual
relative culpabilities of the various persons so liable.
(14) In the case of a willful violation of or a willful refusal to comply with or
obey an order issued by the securities commissioner to any person pursuant to
section 11-51-410 or 11-51-606, the district court of the city and county of Denver,
upon application by the securities commissioner, may issue to the person an order
requiring that person to appear before the court regarding such violation or refusal.
If the securities commissioner establishes by a preponderance of the evidence that
the person willfully violated or willfully refused to comply with or obey the order,
the court may impose legal and equitable sanctions as are available to the court in
the case of contempt of court and as the court deems appropriate upon such
person.
Colorado § 11-51-604 (Civil liabilities) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.