A federal court has refused to make it easier for “aftermarket” purchasers of stock to sue over misstatements made in registration statements to the Securities and Exchange Commission in connection with an IPO.
The Securities Act of 1933 allows “any person acquiring” shares issued pursuant to an untrue registration statement to sue for damages. That standard is met by investors who purchased stock during the relevant public offerings—those who buy in the secondary market have a much more difficult time meeting the standard because their stock must be “traceable” back to the public offering.
