Neither Vuong Nor Ber lin Purchased Celera Stock Pursuant to a Prospectus Section 12(a)(2) imposes liability on persons who sold securities “by means of a prospectus” that contained material misrepresentations or omissions. 15 U.S.C. § 77l(a)(2). No one sold Celera stock to Vuong or Berlin “by means of a prospectus.”

See Feyko v. Yuhe Int’l, Inc., 2013 WL 816409, at *8 (C.D. Cal. Mar. 5, 17 Section 12 similarly provides that an underwriter is not liable for a misstatement or omission in a prospectus where “he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission.” 15 U.S.C. § 77l(a)(2). The standard for this defense is “similar, if not identical” to the standard under Section 11(b)(3)(C).

Plaintiffs properly pleaded the necessary facts to support this claim at Paragraphs 34, 37-52, 56-65, 104-110, 126-130 of the Complaint. (ii) Plaintiffs Properly Pleaded Alternative Control- Person Liability Claims Under 15 U.S.C. § 77o(a) As an alternative to the claims alleged in Counts I and III, and if the Court were to determine that the acts and omissions complained of in Counts I and III are found to be those of LRM and not Defendant, Plaintiffs properly alleged claims for control-person-liability under 15 U.S.C. § 77o in Counts II and IV arising from Case 1:14-cv-07495-JHR-JS Document 129 Filed 07/03/17 Page 24 of 33 PageID: 1234 3891099_1 20 violations of 15 U.S.C. § 77l(a)(1) and (2) and 15 U.S.C. § 77e(a). It bears repeating, Plaintiffs are not seeking to pierce LRM’s corporate veil, merely to allege an independent and alternative claim of control-person liability.

Similarly, under § 12(a)(2), the measure of loss is: [T]he consideration paid for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if he no longer owns the security. Case 5:11-cv-00520-D Document 120 Filed 11/15/12 Page 42 of 50 35 15 U.S.C. § 77l. Plaintiffs have sufficiently alleged that material misstatements in the Offering Materials caused a decline in the share value of GMX common stock and are therefore entitled to recover any decline in the value of their shares.

Section 12, by its terms, extends seller liability only “to the person purchasing such security from” a defendant. 15 U.S.C. § 77l(a)(2); see also Endo v. Albertine, 147 F.R.D. 164, 172 (N.D. Ill. 1993) (explaining that plaintiffs can only recover from the specific defendants from whom they purchased stock). Mr. Holmes did not solicit the named plaintiffs and the class cannot bring a section 12 claim against him.

C-08-01510-WHA sf-2801814 25 revealed, and the picture of YieldPlus “corrected” by this information, any future depreciation in share value must necessarily have been “other than . . . depreciation in value resulting from . . . the prospectus . . . not being true.” 15 U.S.C. § 77l(b); see also Metzler, 540 F.3d at 1063. There can be no dispute that losses after March 18, 2008 are not recoverable under section 12.

First, under the ‘33 Act, Section 12 uses the singular expression “any person who,” while Section 11 uses the expressions “every person who,” “every accountant, engineer, appraiser” and “every underwriter.” Compare 15 U.S.C. § 77k(a) with 15 U.S.C. § 77l(a)(2). As one commentator has noted, “[t]he use of the singular rather than the plural is readily apparent to any reader familiar with the 1933 Act,” and the singular was employed in discussions of Section 12 in the legislative history.

Nothing more is required.50 Schaffer, 29 F. Supp. 2d at 1222-23; Sonic Innovations, 2003 U.S. Dist. LEXIS 2378, at *18-*21; Fuwei, 2009 U.S. Dist. LEXIS 59658, at *26; 15 U.S.C. § 77l(a)(2). F. The Complaint Asserts a Claim Under §15 of the Securities Act “To state a claim for controlling person liability, plaintiff need only allege a primary violation of the underlying federal securities statute and ‘control’ by the alleged controlling person.”

Both Sections 11 and 12 limit a plaintiff’s recovery to losses actually caused by the alleged misrepresentations or omissions: a plaintiff may not recover any portion of the alleged damages resulting from other factors. See 15 U.S.C. § 77k(e); 15 U.S.C. § 77l(b). Thus, the absence of such loss causation, or “negative causation,” is an affirmative defense that may be raised on a motion to dismiss where established on the face of the pleadings.

See ECF No. 134, at 59 (Dec. 15, 2014). The Texas legislature intended this “reasonable care” defense to be interpreted in the same manner as the “reasonable care” defense under Section 12 of the federal Securities Act, 15 U.S.C. § 77l(a)(2). When the Texas legislature adopted the “reasonable care” defense in 1977, it noted that the federal securities laws already “have the same provision” in Section 12.