Securities Lawyer's Deskbook                          published by The University of Cincinnati College of Law

Section 20A -- Liability to Contemporaneous Traders for Insider Trading

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1. Private rights of action based on contemporaneous trading
   
   Any person who violates any provision of this title or the rules or regulations thereunder by purchasing or selling a security while in possession of material, nonpublic information shall be liable in an action in any court of competent jurisdiction to any person who, contemporaneously with the purchase or sale of securities that is the subject of such violation, has purchased (where such violation is based on a sale of securities) or sold (where such violation is based on a purchase of securities) securities of the same class.
   
   
2. Limitations on liability
   
   
   1. Contemporaneous trading actions limited to profit gained or loss avoided
      
      The total amount of damages imposed under subsection (a) of this section shall not exceed the profit gained or loss avoided in the transaction or transactions that are the subject of the violation.
      
      
   2. Offsetting disgorgements against liability
      
      The total amount of damages imposed against any person under subsection (a) of this section shall be diminished by the amounts, if any, that such person may be required to disgorge, pursuant to a court order obtained at the instance of the Commission, in a proceeding brought under section 21(d) relating to the same transaction or transactions.
      
      
   3. Controlling person liability
      
      No person shall be liable under this section solely by reason of employing another person who is liable under this section, but the liability of a controlling person under this section shall be subject to section 20(a).
      
      
   4. Statute of limitations
      
      No action may be brought under this section more than 5 years after the date of the last transaction that is the subject of the violation.
      
      
3. Joint and several liability for communicating
   
   Any person who violates any provision of this title or the rules or regulations thereunder by communicating material, nonpublic information shall be jointly and severally liable under subsection (a) of this section with, and to the same extent as, any person or persons liable under subsection (a) of this section to whom the communication was directed.
   
   
4. Authority not to restrict other express or implied rights of action
   
   Nothing in this section shall be construed to limit or condition the right of any person to bring an action to enforce a requirement of this title or the availability of any cause of action implied from a provision of this title.
   
   
5. Provisions not to affect public prosecutions
   
   This section shall not be construed to bar or limit in any manner any action by the Commission or the Attorney General under any other provision of this title, nor shall it bar or limit in any manner any action to recover penalties, or to seek any other order regarding penalties.
   
   

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