PRINTER'S NO. 3718
No. 2579 Session of 2002
INTRODUCED BY G. WRIGHT, THOMAS, BELFANTI, BEBKO-JONES,
COLAFELLA, CORRIGAN, COY, CREIGHTON, CURRY, DeLUCA, J. EVANS,
FAIRCHILD, FREEMAN, GEORGE, HARHAI, HENNESSEY, HORSEY, JAMES,
KELLER, McCALL, McGEEHAN, McILHATTAN, MELIO, MUNDY, PISTELLA,
READSHAW, RUBLEY, SANTONI, SEMMEL, SHANER, SOLOBAY, STABACK,
TANGRETTI, TIGUE, WALKO, WANSACZ, WATERS, WOJNAROSKI,
YOUNGBLOOD, YUDICHAK AND J. TAYLOR, APRIL 17, 2002
REFERRED TO COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT,
APRIL 17, 2002
AN ACT
1 Amending the act of December 5, 1972 (P.L.1280, No.284),
2 entitled "An act relating to securities; prohibiting
3 fraudulent practices in relation thereto; requiring the
4 registration of broker-dealers, agents, investment advisers,
5 and securities; and making uniform the law with reference
6 thereto," further providing for sales and purchases.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Section 401 of the act of December 5, 1972
10 (P.L.1280, No.284), known as the Pennsylvania Securities Act of
11 1972, is amended to read:
12 Section 401. Sales and Purchases.--(a) It is unlawful for
13 any person, in connection with the offer, sale or purchase of
14 any security in this State, directly or indirectly:
15 [(a)] (i) To employ any device, scheme or artifice to
16 defraud;
17 [(b)] (ii) To make any untrue statement of a material fact
1 or to omit to state a material fact necessary in order to make
2 the statements made, in the light of the circumstances under
3 which they are made, not misleading; or
4 [(c)] (iii) To engage in any act, practice or course of
5 business which operates or would operate as a fraud or deceit
6 upon any person.
7 (b) For purposes of establishing the causation element of an
8 alleged violation of subsection (a), a plaintiff shall not be
9 required to prove that he was directly aware of or that he
10 directly relied on the defendant's misrepresentations. An
11 individual shall satisfy the causation element of an alleged
12 violation of subsection (a) by showing that the individual
13 purchased the security in an open and developed securities
14 market and that the defendant made a material representation. If
15 an individual establishes the requirements of this subsection, a
16 court shall presume that the misrepresentations occasioned a
17 rise in the security's value and induced the individual to
18 purchase the security.
19 (c) A defendant may submit evidence to rebut the presumption
20 created under subsection (b) and may offer all defenses
21 available, including, but not limited to:
22 (i) the market did not respond to defendant's
23 misrepresentation;
24 (ii) the plaintiff knew of the falsity of defendant's
25 statements when he purchased the security; or
26 (iii) the plaintiff would have purchased the security even
27 if the plaintiff had known of defendant's false statements.
28 Section 2. This act shall take effect in 60 days.
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