Barchrome Company issued debentures in November 1996 to raise capital to finance a new manufacturing plant.John was one of the small investors who bought those debentures.In December 2000,John discovered that Barchrome's registration statement contained material misstatements (it had overstated current assets by 11 percent and sales by 8 percent).John sued Barchrome in January 2001.Is Barchrome liable?

Question

Quizplus · Accepted Answer

Barchrome has liability for misstatement or omissions of material facts on its registration statement under Section 11 of the 1933 Act.However,the statute of limitations is up to one year after discovery of facts constituting a violation of Section 11 and three years after the violation.As such,Barchrome will no longer be liable in January 2001 (four years after the violation).

Barchrome Company Issued Debentures in November 1996 to Raise Capital