SEC's Expanded Arsenal: Control Person Liability

Under the recent leadership of Chairman Mary Schapiro and Enforcement Director Robert Khuzami, the U.S. Securities and Exchange Commission Enforcement Division has introduced a series of new enforcement initiatives.

One of the more striking of these initiatives is the expanded use of Section 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), the control person liability provision of the Exchange Act.

During the summer of 2009, the SEC brought two settled enforcement actions in which it sued a defendant based solely on the control person liability provisions of the federal securities laws.

Reprinted with permission from Portfolio Media, Inc. (http://www.law360.com)