Privity of contract is irrelevant in lawsuits based on Section 10(b)and Rule 10b-5 of the Securities Exchange Act of 1934.

Question

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Privity of contract refers to the legal relationship between the parties to a contract. Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 create a cause of action for securities fraud that is available to any investor who suffers damages as a result of the defendant's misrepresentation or omission of material facts. The cause of action is not limited to parties who were in privity of contract with the defendant.

Privity of Contract Is Irrelevant in Lawsuits Based on Section