sec11

Section 11, commonly referred to as Sec 11, is a provision of the Securities Act of 1933 codified at 15 U.S.C. § 77k. It creates a liability framework for false or misleading statements in a company’s registration statement for securities offered to the public. The core purpose is to encourage thorough and accurate disclosures to investors at the time securities are first registered.

Liability under Section 11 attaches to the issuer, directors, and officers who sign the registration statement, underwriters, and certain experts named in the filing (such as accountants or engineers) who contributed to the registration. The statute also extends to others who prepared or certified the document to the extent they are identified in the registration statement. A key feature is that a plaintiff need not prove the defendant’s intent or scienter; liability can arise from untrue statements of material fact or omissions of material facts required to make the statements not misleading.

Proof of reliance is generally not required for Section 11 claims because the purchase of securities registered under the statement is itself viewed as reliance on the accuracy of that document. Damages are typically measured by the price paid for the securities and related losses, with potential recovery of costs and, in some circumstances, attorneys’ fees.

Defenses include a due diligence defense for certain defendants, or showing that no untrue statement or omission occurred. Section 11 operates alongside other securities laws to promote transparent disclosure and provide a remedy for investors when registration statements are inaccurate or incomplete.