Liability on the part of issuers and underwriting banks for the correctness of data contained in offering prospectuses.
When it can be clearly proven that information contained in an issuing prospectus is inaccurate, an investor who has purchased newly issued securities has the right to return them to the issuer or the underwriting bank, who are then obligated to refund the issue price as well as any related transaction costs. In the case of securities acquired on the open market, the investor is entitled to a refund of the purchase price; if the securities have already been sold, the investor will be compensated for any losses incurred.
The statute of limitations for filing a claim against an issuer or underwriting bank regarding statements made in a prospectus runs out six months after the information was determined to be incorrect, or three years after the prospectus was published, whichever comes first.
