# § 77l. Civil liabilities arising in connection with prospectuses and communications
**(a)** **In general** Any person who—
shall be liable, subject to subsection (b), to the person purchasing such security 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 with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if he no longer owns the security.
**(1)** offers or sells a security in violation of section 77e of this title, or
**(2)** offers or sells a security (whether or not exempted by the provisions of section 77c of this title, other than paragraphs (2) and (14) of subsection (a) of said section), by the use of any means or instruments of transportation or communication in interstate commerce or of the mails, by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state 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,
**(b)** **Loss causation** In an action described in subsection (a)(2), if the person who offered or sold such security proves that any portion or all of the amount recoverable under subsection (a)(2) represents other than the depreciation in value of the subject security resulting from such part of the prospectus or oral communication, with respect to which the liability of that person is asserted, not being true or omitting to state 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.
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**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.)
## Editorial Notes
### Amendments
2000—Subsec. (a)(2). substituted “paragraphs (2) and (14)” for “paragraph (2)”.
1995— 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 , inserted “offers or” before “sells” in pars. (1) and (2).
## Statutory Notes and Related Subsidiaries
### Effective Date of 1995 Amendment
> “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, 78
>
> , 78t, and 78u of this title and
>
> , Crimes and Criminal Procedure] shall not affect or apply to any private action arising under title I of the Securities Exchange Act of 1934 [
>
> et seq.] or title I of the Securities Act of 1933 [
>
> et seq.], commenced before and pending on the date of enactment of this Act [
>
> ].”
, , , provided that:
### Effective Date of 1954 Amendment
Amendment by act , effective 60 days after , see note under .
### Construction of 1995 Amendment
Nothing in amendment by 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 ( et seq.), see , set out as a Construction note under .