Alleged misstatements in prospectuses and registration statements are frequently the basis for federal securities litigation, including fraud claims under Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5. The targets of this sort of litigation may include not only issuers and their officers and directors, but also underwriters and other outside professionals who assist in securities offerings by, among other things, participating in the drafting of offering documents. Thus, courts have considered whether underwriters can have primary liability under Section 10(b) or Rule 10b-5 for alleged misstatements in offering documents, or whether their only potential liability under those provisions is for aiding and abetting a primary violation by the issuer.

This question was largely academic until the U.S. Supreme Court’s 1994 decision in Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A.,1 holding that Section 10(b) and Rule 10b-5 do not permit private plaintiffs to recover damages on an aiding and abetting theory. Subsequent to Central Bank, the lower federal courts—struggling to discern the line between conduct giving rise to primary liability, for which private plaintiffs may recover, and mere aiding and abetting, for which they may not—have reached inconsistent results with respect to underwriters.

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