A Short History of Arizona's Securities Laws: Wildcats, Bucket Shops, and a Radical Bunny

23 Pages Posted: 10 Apr 2012 Last revised: 19 Oct 2012

Date Written: April 9, 2012

Abstract

The idea of using government-enforced legislation to protect securities investors was foreign to nineteenth-century thinking. But during the first decade of the twentieth century, interest in state and federal securities legislation developed in several ways. Arizona enacted a bucket-shop law in 1909. A year later, at the 1910 Constitutional Convention, Arizona’s delegates approved a constitutional provision empowering the Corporation Commission to inspect records and investigate corporations that publicly sell stock. In 1912, Arizona became the second state to enact a blue-sky law. The 1912 Act was administered by the newly empowered Corporation Commission. Arizona supplemented the 1912 Act with two more blue-sky laws in 1917 and 1921. These early statutes included registration, licensing, and criminal statutes, but they did not provide for civil liability. To fill the gap, Arizona’s courts judicially implied remedies. In 1951, Arizona’s legislature replaced the blue-sky laws with an entirely new securities act. The 1951 Act included statutes that provide for civil liability of sellers, purchasers, and persons who participate in or induce fraudulent sales. The 1951 Act’s participate-or-induce standard is a defining feature of Arizona’s securities laws. The meaning and application of the standard are among the most litigated issues in Arizona securities law. The article analyzes the major decisions on Arizona’s participate-or-induce standard including five 2011-12 decisions. Aspects of these decisions regarding aiding and abetting under Arizona’s securities laws are also addressed.

Keywords: Blue Sky Laws, IBA, wildcat corporation, George W.P. Hunt, Arizona Constitutional Convention, participation liability, Earl Hastings, 1951 Arizona Securities Act, Arizona Corporation Commission, state securities law, secondary liability, aiding and abetting, induce

JEL Classification: K22

Suggested Citation

Himelrick, Richard G., A Short History of Arizona's Securities Laws: Wildcats, Bucket Shops, and a Radical Bunny (April 9, 2012). Available at SSRN: https://ssrn.com/abstract=2034013 or http://dx.doi.org/10.2139/ssrn.2034013

Richard G. Himelrick (Contact Author)

Tiffany & Bosco, PA ( email )

Seventh Floor Camelback Esplanade II
2525 E. Camelback Road
Phoenix, AZ 85016
United States
602-255-6000 (Phone)

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