2015 ORS 59.115¹
Liability in connection with sale or successful solicitation of sale of securities
  • recovery by purchaser
  • limitations on proceeding
  • attorney fees

(1) A person is liable as provided in subsection (2) of this section to a purchaser of a security if the person:

(a) Sells or successfully solicits the sale of a security, other than a federal covered security, in violation of the Oregon Securities Law or of any condition, limitation or restriction imposed upon a registration or license under the Oregon Securities Law; or

(b) Sells or successfully solicits the sale of a security in violation of ORS 59.135 (Fraud and deceit with respect to securities or securities business) (1) or (3) 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 statements made, in light of the circumstances under which they are made, not misleading (the buyer not knowing of the untruth or omission), and who does not sustain the burden of proof that the person did not know, and in the exercise of reasonable care could not have known, of the untruth or omission.

(2) The purchaser may recover:

(a) Upon tender of the security, the consideration paid for the security, and interest from the date of payment equal to the greater of the rate of interest specified in ORS 82.010 (Legal rate of interest) for judgments for the payment of money or the rate provided in the security if the security is an interest-bearing obligation, less any amount received on the security; or

(b) If the purchaser no longer owns the security, damages in the amount that would be recoverable upon a tender, less the value of the security when the purchaser disposed of it and less interest on such value at the rate of interest specified in ORS 82.010 (Legal rate of interest) for judgments for the payment of money from the date of disposition.

(3) Every person who directly or indirectly controls a seller liable under subsection (1) of this section, every partner, limited liability company manager, including a member who is a manager, officer or director of such seller, every person occupying a similar status or performing similar functions, and every person who participates or materially aids in the sale is also liable jointly and severally with and to the same extent as the seller, unless the nonseller sustains the burden of proof that the nonseller did not know, and, in the exercise of reasonable care, could not have known, of the existence of facts on which the liability is based. Any person held liable under this section shall be entitled to contribution from those jointly and severally liable with that person.

(4) Notwithstanding the provisions of subsection (3) of this section, a person whose sole function in connection with the sale of a security is to provide ministerial functions of escrow, custody or deposit services in accordance with applicable law is liable only if the person participates or materially aids in the sale and the purchaser sustains the burden of proof that the person knew of the existence of facts on which liability is based or that the person’s failure to know of the existence of such facts was the result of the person’s recklessness or gross negligence.

(5) Any tender specified in this section may be made at any time before entry of judgment.

(6) Except as otherwise provided in this subsection, no action or suit may be commenced under this section more than three years after the sale. An action under this section for a violation of subsection (1)(b) of this section or ORS 59.135 (Fraud and deceit with respect to securities or securities business) may be commenced within three years after the sale or two years after the person bringing the action discovered or should have discovered the facts on which the action is based, whichever is later. Failure to commence an action on a timely basis is an affirmative defense.

(7) An action may not be commenced under this section solely because an offer was made prior to registration of the securities.

(8) Any person having a right of action against a broker-dealer, state investment adviser or against a salesperson or investment adviser representative acting within the course and scope or apparent course and scope of authority of the salesperson or investment adviser representative, under this section shall have a right of action under the bond or irrevocable letter of credit provided in ORS 59.175 (Procedures for notice filing and licensing).

(9) Subsection (4) of this section shall not limit the liability of any person:

(a) For conduct other than in the circumstances described in subsection (4) of this section; or

(b) Under any other law, including any other provisions of the Oregon Securities Law.

(10) Except as provided in subsection (11) of this section, the court may award reasonable attorney fees to the prevailing party in an action under this section.

(11) The court may not award attorney fees to a prevailing defendant under the provisions of subsection (10) of this section if the action under this section is maintained as a class action pursuant to ORCP 32. [1967 c.537 §13(1), (2), (3), (4), (5), (7); 1985 c.349 §13; 1987 c.158 §10; 1987 c.603 §6; 1989 c.197 §5; 1991 c.331 §15; 1991 c.762 §1; 1993 c.508 §28; 1995 c.93 §27; 1995 c.696 §9; 1997 c.772 §9; 2003 c.576 §318; 2003 c.631 §1; 2003 c.786 §1]

Notes of Decisions

Claim of indemnity is ac­tionable against of­fi­cers or directors of sellers or participants in sale of unregistered securities under Oregon Blue Sky Law. Black & Co. v. Nova-Tech, Inc., 333 F Supp 468 (1971)

Although plaintiff has burden of proving knowledge of illegal securities transac­tion in order to es­tab­lish liability, such knowledge is not relevant to ques­tion of participa­tion. Black & Co. v. Nova-Tech, Inc., 333 F Supp 468 (1971)

Person may be participant in illegal securities transac­tion without having com­mu­ni­cated with purchaser. Black & Co. v. Nova-Tech, Inc., 333 F Supp 468 (1971)

The three-year limita­tion of this statute will not apply to ac­tions in federal court based on fraud or misrepresenta­tion under S.E.C. Rule 10b-5. Hoffert v. E.F. Hinkle & Co., Inc., 56 FRD 395 (1972)

When attorney prepares, attends to execu­tion of, and per­sonally delivers and files docu­ments re­quired for registra­tion of security with knowledge that solicita­tion and sales of such security have already been made, he "participates or ma­te­ri­ally aids" in sale of unregistered security. Adams v. American Western, 265 Or 514, 510 P2d 838 (1973)

Commence­ment of a class ac­tion suspended the limita­tion period as to members of the class who would have been parties had the suit been permitted to continue as a class ac­tion. Bergquist v. Intl. Realty, Ltd., 272 Or 416, 537 P2d 553 (1975)

A failure to account and deliver under ORS 59.205 (Grounds for denying, suspending, revoking or imposing condition or restriction on license) states a cause of ac­tion under this sec­tion. State ex rel Healy v. Maryland Cas. Co. and Deal, 27 Or App 735, 557 P2d 258 (1976), Sup Ct review denied

An ac­tion on the bond under ORS 59.175 (Procedures for notice filing and licensing) is not subject to the three-year statute of limita­tions under this sec­tion. State ex rel Healy v. Maryland Cas. Co. and Deal, 27 Or App 735, 557 P2d 258 (1976), Sup Ct review denied

The Corpora­tion Commissioner had capacity to bring an ac­tion on the bond in behalf of unnamed injured per­sons. State ex rel Healy v. Maryland Cas. Co. and Deal, 27 Or App 735, 557 P2d 258 (1976), Sup Ct review denied

A limited partnership interest is a "security" subject to the anti-fraud pro­vi­sion of the Oregon Securities Law. Pratt v. Kross, 276 Or 483, 555 P2d 765 (1976)

Public policy does not prohibit nonculpable directors who have incurred liability under this sec­tion from seeking indemnity from those actually responsible for the wrongful issuance of unregistered securities. Collins v. Fitzwa­ter, 277 Or 401, 560 P2d 1074 (1977)

Transac­tion whereby plaintiff paid $6,000 to defendant and took back promissory note in defendant's corpora­tion, with agree­ment that plaintiff would have op­tion to convert note to 50% interest in new corpora­tion plus 25% interest in defendant's corpora­tion, constituted "op­tion for the sale of ... a security." Foelker v. Kwake, 279 Or 379, 568 P2d 1369 (1977)

Purchaser defrauded under this sec­tion was entitled to recover, in addi­tion to costs, only $6000 paid for security plus interest from date of purchase, and judg­ment awarding purchaser $9,162 was in error. Foelker v. Kwake, 279 Or 379, 568 P2d 1369 (1977)

Where seller of securities was allegedly defrauded, this sec­tion expressly gave a remedy only to purchasers, and a remedy would not be implied in favor of sellers. Held v. Product Manufacturing Co., 286 Or 67, 592 P2d 1005 (1979)

Where defendants, of­fi­cers and directors of corpora­tion, who controlled 94 percent of its stock voted to declare 100-for-1 reverse stock split and soon after corpora­tion changed its stock repurchase policy so that it would buy back mi­nority shareholders stock at 50 percent of book value rather than at full book value as pre­vi­ously done, plaintiffs were not forced to sell their stock solely to corpora­tion, and were not purchasers or sellers within meaning of this sec­tion and had no standing to sue under this sec­tion. Shivers v. Amerco, 670 F2d 826 (1982)

Liability for untrue state­ment or omission of ma­te­ri­al fact exists regardless of whether investor relied on state­ment or omission. Everts v. Holtmann, 64 Or App 145, 667 P2d 1028 (1983), Sup Ct review denied

Persons who prepare and execute docu­ments knowingly intending to defraud one party may be held liable under this sec­tion even though docu­ments are used to defraud party other than one originally intended; allega­tions that defendants prepared and executed contract misrepresenting terms of agree­ment and that misrepresenta­tion was for sole purpose of deceiving a third party were sufficient to withstand mo­tion to dismiss complaint. Fakhrdai v. Mason, 72 Or App 681, 696 P2d 1164 (1985), Sup Ct review denied

Attorney "participates or ma­te­ri­ally aids in the purchase" of securities under this sec­tion if attorney's routine professional services are coupled with knowledge of viola­tion of Oregon securities laws by seller; if accountant performs number of services and knew buyers were being defrauded accountant may be liable under this sec­tion. Ahern v. Gaussoin, 611 F Supp 1465 (1985)

Where seller of unregistered securities alleges that purchaser had actual or constructive knowledge that securities were unregistered, equitable de­fenses are not available in ac­tion by purchaser under this sec­tion. Hall v. Johnston, 758 F2d 421 (1985)

Where plaintiff received tax benefits from invest­ment in unregistered securities, damages shall equal plaintiff's losses exclusive of tax benefits and under tax benefit rule, prior tax credits will be disallowed. Hall v. Johnston, 758 F2d 421 (1985)

In ac­tion for securities law viola­tions, where plaintiff presented sufficient evidence for jury to find that defendant either controlled seller of stock within meaning of this sec­tion or that defendant sold stock through his agent in viola­tion of this sec­tion, court did not err in admitting testimony of purported agent's state­ments re­gard­ing defendant's knowledge and approval of stock sale. Wicks v. O'Connell, 89 Or App 236, 748 P2d 551 (1988)

Lawyer who prepared docu­ments and performed other legal services for partnership could be held liable as one who "participates or ma­te­ri­ally aids" in unlawful sale of security (limited partnership units) under ORS 59.115 (Liability in connection with sale or successful solicitation of sale of securities) (3), unless he es­tab­lished lack of knowledge as af­firm­a­tive de­fense. Prince v. Brydon, 307 Or 146, 764 P2d 1370 (1988)

Where plaintiff partner in securities ac­tion arising out of partnership agree­ment filed Oregon Securities Fraud Claim and interest in general partnership found not to be "security," defendants' mo­tion for summary judg­ment granted. Casablanca Produc­tions v. Pace Intern. Research, 697 F Supp 1563 (D. Or. 1988)

Invest­ment companies' failure to adequately supervise their of­fi­cer or agent could impose liability for sec­ondary viola­tions of securities laws. Pincetich v. Jeanfreau, 699 F Supp 1469 (D. Or. 1988)

This sec­tion applies only to buyer-seller rela­tionship and may not be used as basis for award of damages or fees in dispute between parties with principal-agent rela­tionship. Nesbit v. McNeil, 896 F2d 380 (9th Cir. 1990)

Common law agency principles may be invoked to impose liability against principal for agent's viola­tion of this sec­tion. Badger v. Paulson Invest­ment Co., Inc., 311 Or 14, 803 P2d 1178 (1991)

Evidence of apparent agency rela­tionship between principal and agent is sufficient to impose liability on principal under this sec­tion. Badger v. Paulson Invest­ment Co., Inc., 311 Or 14, 803 P2d 1178 (1991)

Where parent corpora­tion transferred stock directly to landowners in partial pay­ment for land purchased by subsidiary corpora­tion, subsidiary corpora­tion was not seller of stock. West Park Associates v. Butterfield Sav. & Loan, 814 F Supp 925 (1993)

Securities law liability based solely on status as control per­son does not constitute crim­i­nal con­duct that can serve as predicate of­fense for Oregon Racketeer Influenced and Corrupt Organiza­tion Act liability. Computer Concepts, Inc. v. Brandt, 137 Or App 572, 905 P2d 1177 (1995)

Partial pay­ments on judg­ment are applicable first to accumulated interest, then to principal. Ainslie v. Spolyar, 144 Or App 134, 926 P2d 822 (1996)

Allega­tion of viola­tion of ORS 59.135 (Fraud and deceit with respect to securities or securities business) is subject to alternative statute of limita­tions applicable to that sec­tion, even though liability for viola­tion is allegedly created under this sec­tion. Anderson v. Carden, 146 Or App 675, 934 P2d 562 (1997), Sup Ct review denied

Knowledge of illegality is not re­quired for participant or provider of ma­te­ri­al aid to be liable. Ainslie v. First Interstate Bank, 148 Or App 162, 939 P2d 125 (1997)

Law Review Cita­tions

53 OLR 170 (1974); 68 OLR 227, 891 (1989); 69 OLR 396 (1990); 34 WLR 31 (1998); 37 WLR 335 (2001); 50 WLR 195 (2014)

Law Review Cita­tions

56 OLR 473 (1977); 68 OLR 228 (1989)

Chapter 59

Notes of Decisions

Public policy does not prohibit nonculpable corporate directors held liable under this chapter from seeking indemnifica­tion from per­sons actually responsible for the wrongful issuance of unregistered securities. Collins v. Fitzwa­ter, 277 Or 401, 560 P2d 1074 (1977)

Atty. Gen. Opinions

Addi­tional real estate license not re­quired where security sold is interest in limited partnership to invest in real estate, (1978) Vol 38, p 1971


1 Legislative Counsel Committee, CHAPTER 59—Securities Regulation, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ors059.­html (2015) (last ac­cessed Jul. 16, 2016).
 
2 Legislative Counsel Committee, Annotations to the Oregon Revised Stat­utes, Cumulative Supplement - 2015, Chapter 59, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ano059.­html (2015) (last ac­cessed Jul. 16, 2016).
 
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.