Series 63 practice questionhardSale to Third Party — Damages
An investor who bought an unregistered security sells it to an unrelated third party before discovering the violation. What is the investor's most likely civil remedy under the USA?
- ANo civil remedy, as the investor no longer owns the security
- BRecover the difference between original purchase price and resale price, plus statutory interest✓ Correct answer
- CRecover the full original purchase price plus statutory interest
- DRecover only statutory interest accrued
Explanation
Why B — Recover the difference between original purchase price and resale price, plus statutory interest
If the security is sold to a third party, damages are typically the difference between purchase and resale price, plus statutory interest, per USA Section 410(a)(3). Full rescission is unavailable since the investor can't return the security.
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