§ 23-19-5-9 — Civil liability; defense; rights and remedies; joint and several liability; right of contribution; statute of limitations; contractual waivers void

Indiana § 23-19-5-9

• Jurisdiction: Indiana
• Title 23: BUSINESS AND OTHER ASSOCIATIONS
• Art. 19: INDIANA UNIFORM SECURITIES ACT
• Ch. 5: Fraud and Liabilities

Text

(a) Except as provided in section 11 of this
chapter, a person is liable to the purchaser if the person sells a security
in violation of this article, including a violation of IC 23-19-4-12(d)(9)
or IC 23-19-4-12(d)(13). It is a defense if the person selling the security
sustains the burden of proof that either the person did not know, and in
the exercise of reasonable care could not have known, of the violation
or the purchaser knowingly participated in the violation. An action
under this subsection is governed by the following:
(1) The purchaser may maintain an action to recover the
consideration paid for the security, less the amount of any income
received on the security, and interest at the greater of eight
percent (8%) per annum or the rate provided for in the security
from the date of the purchase, costs, and reasonable attorney's
fees determined by the court or arbitrator, upon the tender of the
security, or for actual damages as provided in subdivision (3).
(2) The tender referred to in subdivision (1) may be made any
time before entry of judgment. Tender requires only notice in a
record of ownership of the security and willingness to exchange
the security for the amount specified. A purchaser that no longer
owns the security may recover actual damages as provided in
subdivision (3).
(3) Actual damages in an action arising under this subsection are
the amount that would be recoverable upon a tender less the value
of the security when the purchaser disposed of it, and interest at
the greater of eight percent (8%) per annum or the rate provided
for in the security from the date of the purchase, costs, and
reasonable attorneys' fees determined by the court or arbitrator.
(b) Except as provided in section 11 of this chapter, a person is
liable to the seller if the person buys a security in violation of this
article, including a violation of IC 23-19-4-12(d)(9) or IC 23-19-4-12(d)(13). It is a defense if the person purchasing the security
sustains the burden of proof that either the person did not know, and in
the exercise of reasonable care could not have known, of the conduct
constituting the violation or the seller knowingly participated in the
violation. An action under this subsection is governed by the following:
(1) The seller may maintain an action to recover the security, and
any income received on the security, costs, and reasonable
attorney's fees determined by the court or arbitrator, upon the
tender of the purchase price, or for actual damages as provided in
subdivision (3).
(2) The tender referred to in subdivision (1) may be made any
time before entry of judgment. Tender requires only notice in a
record of the present ability to pay the amount tendered and
willingness to take delivery of the security for the amount
specified. If the purchaser no longer owns the security, the seller
may recover actual damages as provided in subdivision (3).
(3) Actual damages in an action arising under this subsection are
the difference between the price at which the security was sold
and the value the security would have had at the time of the sale
in the absence of the purchaser's conduct causing liability, and
interest at the greater of eight percent (8%) per annum or the rate
provided for in the security from the date of the sale of the
security, costs, and reasonable attorney's fees determined by the
court or arbitrator.
(c) A person acting as an investment adviser or investment adviser
representative that provides investment advice for compensation in
violation of this article is liable to the client. An action under this
subsection shall be governed by the following:
(1) For a violation of section 1 or 2 of this chapter, the client may
maintain an action to recover the consideration paid for the advice
and the amount of any actual damages caused by the fraudulent
conduct, interest at the greater of eight percent (8%) per annum
or the rate provided for in the security from the date of the
fraudulent conduct, costs, and reasonable attorney's fees
determined by the court less the amount of any income received
as a result of the fraudulent conduct.
(2) For a violation of any other section of this article, the client
may maintain an action to recover the consideration paid for the
advice, interest at the greater of eight percent (8%) per annum or
the rate provided for in the security from the date of payment,
costs, and reasonable attorney's fees determined by the court or
arbitrator.
(3) This subsection does not apply to a broker-dealer or its agents
if the investment advice provided is solely incidental to
transacting business as a broker-dealer and no special
compensation is received for the investment advice.
(d) The following persons are liable jointly and severally with and
to the same extent as persons liable under subsections (a) through (c):
(1) A person that directly or indirectly controls a person liable
under subsections (a) and (b), unless the controlling person
sustains the burden of proof that the controlling person did not
know, and in the exercise of reasonable care could not have
known, of the existence of the conduct by reason of which the
liability is alleged to exist.
(2) An individual who is a managing partner, executive officer, or
director of a person liable under subsections (a) through (c),
including an individual having a similar status or performing
similar functions, unless the individual sustains the burden of
proof that the individual did not know, and in the exercise of
reasonable care could not have known, of the existence of conduct
by reason of which the liability is alleged to exist.
(3) An individual who is an employee of or associated with a
person liable under subsections (a) through (c) and who
materially aids the conduct giving rise to the liability, unless the
individual sustains the burden of proof that the individual did not
know, and in the exercise of reasonable care could not have
known, of the existence of conduct by reason of which the
liability is alleged to exist.
(4) A person that is a broker-dealer, agent, investment adviser, or
investment adviser representative that materially aids the conduct
giving rise to the liability under subsections (a) through (c),
unless the person sustains the burden of proof that the person did
not know, and in the exercise of reasonable care could not have
known, of the existence of conduct by reason of which liability is
alleged to exist.
(e) A person liable under this section has a right of contribution as
in cases of contract against any other person liable under this section
for the same conduct.
(f) A cause of action under this section survives the death of an
individual who might have been a plaintiff or defendant.
(g) Action under this section shall be commenced within three (3)
years after discovery by the person bringing the action of a violation of
this article, and not afterwards.
(h) A person that has made, or has engaged in the performance of,
a contract in violation of this article or a rule adopted or order issued
under this article, or that has acquired a purported right under the
contract with knowledge of conduct by reason of which its making or
performance was in violation of this article, may not base an action on
the contract.
(i) A condition, stipulation, or provision binding a person
purchasing or selling a security or receiving investment advice to waive
compliance with this article or a rule adopted or order issued under this
article is void.
(j) The rights and remedies provided by this article are in addition
to any other rights or remedies that may exist.

Legislative History

As added by P.L.27-2007, SEC.23. Amended by P.L.146-2013, SEC.3.