Attorney Liability Under the State Securities Laws: Landscapes and Minefields

Abstract

Attorneys face significant liability exposure under the state securities laws, and they can be held primarily liable when they are "sellers" of securities, or under some state statutes, like California, when they are experts. Depending on the applicable jurisdiction and counsel's status relative to the subject client, secondary liability may be incurred. In a number of states, counsel has liability exposure based on materially aiding the primary violator with the requisite intent.

This article surveys and analyzes attorney liability under state securities law. After presenting a succinct overview of applicable state law in Part II, the article then provides a more in-depth analysis of attorney liability exposure under these state statutes in Part IIl. The article concludes in Part IV with separate treatment of two frequently invoked state statutes-those of California and Texas.

Keywords: Attorney liability, state securities law, Securities Litigation Uniform Standards Act, SLUSA, primary liability, secondary liability, Uniform Securities Acts, USA