There Is a Newer Version of the New Mexico Statutes
2013 New Mexico Statutes
Chapter 58 - Financial Institutions and Regulations
Article 13C - New Mexico Uniform Securities
Article 5 - Fraud and Liabilities
Section 58-13C-509 - Civil liability. (2009)
NM Stat § 58-13C-509 (2013) What's This?
58-13C-509. Civil liability. (2009)
A. Enforcement of civil liability pursuant to this section is subject to the federal Securities Litigation Uniform Standards Act of 1998 (P.L. 105-353, 112 Stat. 3227, et seq.).
B. A person is liable to the purchaser if the person sells a security in violation of Section 301 [58-13C-301 NMSA 1978] of the New Mexico Uniform Securities Act or, by means of an untrue statement of a material fact or an omission to state a material fact necessary in order to make the statement made, in light of the circumstances pursuant to which it is made, not misleading, the purchaser not knowing the untruth or omission and the seller not sustaining the burden of proof that the seller did not know and, in the exercise of reasonable care, could not have known of the untruth or omission. An action pursuant to this subsection is governed by the following:
(1) the purchaser may maintain an action to recover the consideration paid for the security, less the amount of any income received on the security, and interest at the legal rate of interest from the date of the purchase, costs and reasonable attorney fees determined by the court, upon the tender of the security, or for actual damages as provided in Paragraph (3) of this subsection;
(2) the tender referred to in Paragraph (1) of this subsection may be made any time before entry of judgment. Tender requires only notice in a record of ownership of the security and willingness to exchange the security for the amount specified. A purchaser that no longer owns the security may recover actual damages as provided in Paragraph (3) of this subsection; and
(3) actual damages in an action arising pursuant to this subsection are the amount that would be recoverable upon a tender less the value of the security when the purchaser disposed of it, and interest at the legal rate of interest from the date of the purchase, costs and reasonable attorney fees determined by the court.
C. A person is liable to the seller if the person buys a security by means of an untrue statement of a material fact or omission to state a material fact necessary in order to make the statement made, in light of the circumstances pursuant to which it is made, not misleading, the seller not knowing of the untruth or omission, and the purchaser not sustaining the burden of proof that the purchaser did not know, and in the exercise of reasonable care could not have known, of the untruth or omission. An action pursuant to this subsection is governed by the following:
(1) the seller may maintain an action to recover the security, and any income received on the security, costs and reasonable attorney fees determined by the court, upon the tender of the purchase price, or for actual damages as provided in Paragraph (3) of this subsection;
(2) the tender referred to in Paragraph (1) of this subsection may be made any time before entry of judgment. Tender requires only notice in a record of the present ability to pay the amount tendered and willingness to take delivery of the security for the amount specified. If the purchaser no longer owns the security, the seller may recover actual damages as provided in Paragraph (3) of this subsection; and
(3) actual damages in an action arising pursuant to this subsection are the difference between the price at which the security was sold and the value the security would have had at the time of the sale in the absence of the purchaser's conduct causing liability, and interest at the legal rate of interest from the date of the sale of the security, costs and reasonable attorney fees determined by the court.
D. A person acting as a broker-dealer or agent that sells or buys a security in violation of Subsection A of Section 401 [58-13C-401 NMSA 1978] of the New Mexico Uniform Securities Act, Subsection A of Section 402 [58-13C-402 NMSA 1978] of that act or Section 506 [58-13C-506 NMSA 1978] of that act is liable to the customer. The customer, if a purchaser, may maintain an action for recovery of actual damages as specified in Paragraphs (1) through (3) of Subsection B of this section, or, if a seller, for a remedy as specified in Paragraphs (1) through (3) of Subsection C of this section.
E. A person acting as an investment adviser or investment adviser representative that provides investment advice for compensation in violation of Subsection A of Section 403 [58-13C-403 NMSA 1978] of the New Mexico Uniform Securities Act, Subsection A of Section 404 [58-13C-404 NMSA 1978] of that act or Section 506 [58-13C-506 NMSA 1978] of that act is liable to the client. The client may maintain an action to recover the consideration paid for the advice, interest at the legal rate of interest from the date of payment, costs and reasonable attorney fees determined by the court.
F. A person that receives, directly or indirectly, any consideration for providing investment advice to another person and that employs a device, scheme or artifice to defraud the other person or engages in an act, practice or course of business that operates or would operate as a fraud or deceit on the other person, is liable to the other person. An action pursuant to this subsection is governed by the following:
(1) the person defrauded may maintain an action to recover the consideration paid for the advice and the amount of any actual damages caused by the fraudulent conduct, interest at the legal rate of interest from the date of the fraudulent conduct, costs and reasonable attorney fees determined by the court, less the amount of any income received as a result of the fraudulent conduct; and
(2) this subsection does not apply to a broker-dealer or its agents if the investment advice provided is solely incidental to transacting business as a broker-dealer and no special compensation is received for the investment advice.
G. The following persons are liable jointly and severally with and to the same extent as persons liable pursuant to Subsections B through F of this section:
(1) a person that directly or indirectly controls a person liable pursuant to Subsections B through F of this section, unless the controlling person sustains the burden of proof that the person did not know, and in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist;
(2) an individual who is a managing partner, executive officer or director of a person liable pursuant to Subsections B through F of this section, including an individual having a similar status or performing similar functions, unless the individual sustains the burden of proof that the individual did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist;
(3) an individual who is an employee of or associated with a person liable pursuant to Subsections B through F of this section and who materially aids the conduct giving rise to the liability, unless the individual sustains the burden of proof that the individual did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which the liability is alleged to exist; and
(4) a person that is a broker-dealer, agent, investment adviser or investment adviser representative that materially aids the conduct giving rise to the liability pursuant to Subsections B through F of this section, unless the person sustains the burden of proof that the person did not know and, in the exercise of reasonable care could not have known, of the existence of conduct by reason of which liability is alleged to exist.
H. A person liable pursuant to this section has a right of contribution as in cases of contract against any other person liable pursuant to this section for the same conduct.
I. A cause of action pursuant to this section survives the death of an individual who might have been a plaintiff or defendant.
J. A person shall not obtain relief unless the suit is brought:
(1) within two years after discovery of the violation or after discovery should have been made by the exercise of reasonable diligence; and
(2) within five years after the act or transaction constituting the violation.
K. A person that has made, or has engaged in the performance of, a contract in violation of the New Mexico Uniform Securities Act or a rule adopted or order issued pursuant to that act, or that has acquired a purported right pursuant to the contract with knowledge of conduct by reason of which its making or performance was in violation of the New Mexico Uniform Securities Act, may not base an action on the contract.
L. A condition, stipulation or provision binding a person purchasing or selling a security or receiving investment advice to waive compliance with the New Mexico Uniform Securities Act, or a rule adopted or order issued pursuant to that act, is void.
M. The rights and remedies provided by the New Mexico Uniform Securities Act are in addition to any other rights or remedies that may exist, but that act does not create a cause of action not specified in this section or Subsection E of Section 411 [58-13C-411 NMSA 1978] of that act.
History: Laws 2009, ch. 82, § 509.
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