---
kind: "section"
citation: "15 U.S.C. § 77l"
title: "15"
title_heading: "Commerce and Trade"
number: "77l"
heading: "Civil liabilities arising in connection with prospectuses and communications"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/77l"
units:
  - "Chapter 2A — Securities and Trust Indentures"
  - "Subchapter I — Domestic Securities"
---

# §77l. Civil liabilities arising in connection with prospectuses and communications

- (a) **In general—** Any [person](/usc/15/77b.md?p=a-2) who—
  - (1) [offers](/usc/15/77b.md?p=a-3) or [sells](/usc/15/77b.md?p=a-3) a [security](/usc/15/77b.md?p=a-1) in violation of [section 77e of this title](/usc/15/77e.md), or
  - (2) [offers](/usc/15/77b.md?p=a-3) or [sells](/usc/15/77b.md?p=a-3) a [security](/usc/15/77b.md?p=a-1) (whether or not exempted by the provisions of [section 77c of this title](/usc/15/77c.md), other than paragraphs [(2)](#a-2) and (14) of subsection (a) of said section), by the use of any means or instruments of transportation or communication in [interstate commerce](/usc/15/77b.md?p=a-7) or of the mails, by means of a [prospectus](/usc/15/77b.md?p=a-10) or oral communication, which includes an untrue statement of a material fact or omits to [state](/usc/15/15g.md?p=2) a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading (the purchaser not knowing of such untruth or omission), and who shall not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission,

  shall be liable, subject to [subsection (b)](#b), to the [person](/usc/15/77b.md?p=a-2) purchasing such [security](/usc/15/77b.md?p=a-1) from him, who may sue either at law or in equity in any court of competent jurisdiction, to recover the consideration paid for such [security](/usc/15/77b.md?p=a-1) with interest thereon, less the amount of any income received thereon, upon the tender of such [security](/usc/15/77b.md?p=a-1), or for damages if he no longer owns the [security](/usc/15/77b.md?p=a-1).

- (b) **Loss causation—** In an action described in [subsection (a)(2)](#a-2), if the [person](/usc/15/77b.md?p=a-2) who offered or sold such [security](/usc/15/77b.md?p=a-1) proves that any portion or all of the amount recoverable under [subsection (a)(2)](#a-2) represents other than the depreciation in value of the subject [security](/usc/15/77b.md?p=a-1) resulting from such part of the [prospectus](/usc/15/77b.md?p=a-10) or oral communication, with respect to which the liability of that [person](/usc/15/77b.md?p=a-2) is asserted, not being true or omitting to [state](/usc/15/15g.md?p=2) a material fact required to be stated therein or necessary to make the statement not misleading, then such portion or amount, as the case may be, shall not be recoverable.

## Source credit

(May 27, 1933, ch. 38, title I, § 12, 48 Stat. 84; Aug. 10, 1954, ch. 667, title I, § 9, 68 Stat. 686; Pub. L. 104–67, title I, § 105, Dec. 22, 1995, 109 Stat. 757; Pub. L. 106–554, § 1(a)(5) [title II, § 208(a)(3)], Dec. 21, 2000, 114 Stat. 2763, 2763A–435.)

## Notes

### Editorial Notes

### Amendments

2000—Subsec. (a)(2). Pub. L. 106–554 substituted “paragraphs (2) and (14)” for “paragraph (2)”.

1995—Pub. L. 104–67 designated existing provisions as subsec. (a), inserted heading, inserted “, subject to subsection (b),” after “shall be liable” in concluding provisions, and added subsec. (b).

1954—Act Aug. 10, 1954, inserted “offers or” before “sells” in pars. (1) and (2).

### Statutory Notes and Related Subsidiaries

### Effective Date of 1995 Amendment

Pub. L. 104–67, title I, § 108, Dec. 22, 1995, 109 Stat. 758, provided that: “The amendments made by this title [enacting sections 77z–1, 77z–2, 78u–4, and 78u–5 of this title and amending this section and sections 77t, 78o, 78t, and 78u of this title and section 1964 of Title 18, Crimes and Criminal Procedure] shall not affect or apply to any private action arising under title I of the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.] or title I of the Securities Act of 1933 [15 U.S.C. 77a et seq.], commenced before and pending on the date of enactment of this Act [Dec. 22, 1995].”

### Effective Date of 1954 Amendment

Amendment by act Aug. 10, 1954, effective 60 days after Aug. 10, 1954, see note under section 77b of this title.

### Construction of 1995 Amendment

Nothing in amendment by Pub. L. 104–67 to be deemed to create or ratify any implied right of action, or to prevent Commission, by rule or regulation, from restricting or otherwise regulating private actions under Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), see section 203 of Pub. L. 104–67, set out as a Construction note under section 78j–1 of this title.