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← Series 63: Remedies & Administrative Provisions
Series 63 practice questionmediumAiding and Abetting: Distinguishing Liability

A William Blair supervisor learns that a subordinate is pitching a private placement without following disclosure rules but does nothing. Under the USA, what liability does the supervisor face?

  1. AStrict liability for the subordinate’s conduct.
  2. BPotential joint and several liability if the supervisor materially aided the conduct, subject to Section 410(c)'s statutory defense✓ Correct answer
  3. CNo liability if the supervisor did not directly instruct the subordinate.
  4. DCriminal liability regardless of intent.
Explanation

Why B — Potential joint and several liability if the supervisor materially aided the conduct, subject to Section 410(c)'s statutory defense

USA Section 410(c), not Section 410(f), addresses specified controlling and materially aiding persons. Liability is joint and several unless the person proves lack of knowledge and that reasonable care could not have revealed the relevant facts.

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