The Securities Act of 1933 ("Securities Act") requires full and fair disclosure of the nature of securities sold in interstate and foreign commerce. Section 11 of the Securities Act prohibits false or misleading registration statements. It also provides buyers a private remedy for false or misleading statements against any signer of the registration statement, any partner or director of the issuer, any professional involved in preparing or certifying the statement, and any underwriter. The rule appears simple: if there is a material misstatement or omission in the registration statement, the buyer may sue the seller. Courts disagree, however, over how a section 11 plaintiff must plead his or her claim. Because neither fraud nor mistake is an element of a section 11 claim, courts have applied the liberal notice pleading standard of Rule 8(a)(2) of the Federal Rules of Civil Procedure. Rule 8(a)(2) states that a plaintiff must plead only "a short and plain statement of the claim showing that the pleader is entitled to relief."
Krista L. Turnquist,
Pleading Under Section 11 of the Securities Act of 1933,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol98/iss7/8