Control Person Liability: Tips For Investment Firms

Law360, New York (September 21, 2011, 12:19 PM EDT) -- Investment firms face an ever-expanding range of legal risks associated with making and managing their portfolio company investments. One area of liability that has seen an expansion is “control person” liability under the federal securities laws. This theory is traditionally used against officers and directors of companies alleged to have violated the securities laws, the premise being that these individuals “control” the primary violator.

But recent decisions and U.S. Securities and Exchange Commission actions have expanded the scope of control person liability to expose entities and...
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