Secondary market liability occurs when someone who owns shares in a company sells them in circumstances where information released about the state of the company is false and not yet corrected.

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Secondary market liability, also known as secondary market fraud or Rule 10b-5 liability, occurs when a seller of securities on a secondary market such as a stock exchange provides false or misleading information about the company's financial state, and the buyer relies on this information to make the investment decision. This can result in legal liability for the seller.

Secondary Market Liability Occurs When Someone Who Owns Shares in a Company