Opinion ID: 852516
Heading Depth: 2
Heading Rank: 1

Heading: Relevant Statutory Law

Text: The ISL, Indiana Code sections 23-2-1-1 to 25, is a version of the Uniform Securities Act of 1956. Like its counterparts in most states, it requires registration of newly issued securities and imposes liability for selling unregistered securities. Section 19(a) of the ISL imposes civil liability on the seller of unregistered securities unless an exemption applies for the security or the transaction. [5] Section 19(b) creates a civil remedy against the seller for violations of the Act, and Section 12(2) provides that a sale of securities by means of a material misrepresentation or omission violates the Act. [6] Section 19(d) of the ISL provides in relevant part: A person who directly or indirectly controls a person liable under subsection (a), (b), or (c), a partner, officer or director of the person, . . . are also liable jointly and severally with and to the same extent as the person, unless the person who is liable 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 the facts by reason of which the liability is alleged to exist. The net effect of these provisions is that a director of a selling corporation who cannot sustain the reasonable care defense is liable for both registration and disclosure violations by the corporation.