Gustafson v Alloyd Co.: An Opinion That Did Not Write (From Supreme Court Review, P 99-124, 1996, Dennis J. Hutchinson, David A. Strauss, et al, eds. - See NCJ 163692)

• NCJ Number: 163696
• Author(s): E W Kitch
• Date Published: 1996
• Length: 26 pages
• Sale Source: University of Chicago Press
• Publication Type: Legislation/Policy Analysis
• Language: English
• Country: United States of America

Annotation

This analysis of the U.S. Supreme Court's decision in Gustafson v. Alloyd concludes that this decision regarding securities law had major flaws and may indicate more and greater changes to come.

Abstract

This case involved the requirement of accurate information regarding an offer or sale of a security, as stated in section 12(2) of the Securities Act of 1933. The Court's decision overturned attorneys' longstanding understanding regarding the meaning of the term prospectus. Attorneys had taken a broad view. However, the Court took a narrow view by limiting the scope of section 12(2) to misrepresentations made in connection with offerings required to be registered under the securities law. However, the text of the law does not support the Court's narrow interpretation. This Gustafson decision has a small immediate impact on the securities laws, but it is significant that the court made such an unpersuasive argument to reduce the scope of a private cause of action for misrepresentation in the sale of securities. This decisions and earlier ones either expanding or reducing private remedies reflect unsophisticated, fragmentary, and unconvincing analyses. However, no previous decision in this area is as unpersuasive as that in Gustafson. Footnotes