Vanderbilt Law Review

First Page



The Securities Act of 1933 seeks to protect the investing public by putting into the hands of the potential securities purchaser information upon which he can base an enlightened investing choice. The participants in a public distribution of securities--including the underwriters are required to collect, accurately and completely in a registration statement and an accompanying prospectus, the relevant facts about the company issuing the securities. Failure to do so will render the participants liable under section 11 of the Act. The Act then imposes a duty of care on the underwriter and enforces that duty by the threat of civil liability. The liability imposed by section 11, however, is not absolute. It can be avoided if the underwriter can convince a court that he has been "duly diligent" in collecting the facts