459 U.S. 375
103 S.Ct. 683
74 L.Ed.2d 548
HERMAN & MacLEAN, Petitioner,
Ralph E. HUDDLESTON et al. Ralph E. HUDDLESTON et al., Petitioner, v. HERMAN & MacLEAN.
Nos. 81-680, 81-1076.
Argued Nov. 9, 1982.
Decided Jan. 24, 1983.
Alleging that they were defrauded by misrepresentations in a registration statement and prospectus for certain securities, purchasers of such securities brought a class action in Federal District Court against most of the participants in the offering, seeking recovery under § 10(b) of the Securities Exchange Act of 1934 (1934 Act), which makes it unlawful for "any" person to use "any" manipulative or deceptive device or contrivance in the purchase or sale of "any" security. The trial judge instructed the jury to determine whether the plaintiffs had proved their cause of action by a preponderance of the evidence, and judgment was entered on the basis of a jury verdict in plaintiffs' favor. The Court of Appeals held that a cause of action may be maintained under § 10(b) for fraudulent misrepresentations and omissions even when, as in this case, that conduct might also be actionable under § 11 of the Securities Act of 1933 (1933 Act), which expressly allows purchasers of a registered security to sue certain enumerated parties who play a direct role in a registered offering when false or misleading information is included in a registration statement. However, the Court of Appeals concluded that a plaintiff seeking recovery under § 10(b) of the 1934 Act must prove his case by "clear and convincing" evidence, and reversed and remanded on other grounds.
1. The availability of an express remedy under § 11 of the 1933 Act does not preclude defrauded purchasers of registered securities from maintaining an action under § 10(b) of the 1934 Act. Pp. 380-387.
(a) The two provisions involve distinct causes of action and were intended to address different types of wrongdoing. Under § 11, a plaintiff need only show a material misstatement or omission in a registration statement to establish a prima facie case. Such an action must be brought by a purchaser of a registered security, and can only be brought against certain parties. In contrast, § 10(b) is a "catchall" antifraud provision and requires a purchaser or seller of a security, in order to establish a cause of action, to prove that the defendant acted with scienter. Pp. 380-382.
(b) To exempt conduct actionable under § 11 from liability under § 10(b) would conflict with the basic purpose of the 1933 Act: to provide greater protection to purchasers of registered securities. It is hardly a novel proposition that the two Acts prohibit some of the same conduct. Cf. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 96 S.Ct. 1375, 47 L.Ed.2d 668. A cumulative construction of the remedies under the Acts is also supported by the fact that when Congress comprehensively revised the securities laws in 1975, federal courts had consistently recognized an implied private right of action under § 10(b) even where express remedies under § 11 or other provisions were available. A cumulative construction of the securities laws also furthers their broad remedial purposes. Pp. 382-387.
2. Persons seeking recovery under § 10(b) need prove their cause of action by a preponderance of the evidence only, not by clear and convincing evidence. The preponderance standard has been consistently employed in private actions under the securities laws. Cf. SEC v. C.M. Joiner Leasing Corp., 320 U.S. 344, 64 S.Ct. 120, 88 L.Ed. 88. Reference to the traditional use of a higher burden of proof in civil fraud actions at common law is unavailing here. An important purpose of the federal securities statutes was to rectify perceived deficiencies in the available common-law protections by establishing higher standards of conduct in the securities industry. The balance of the parties' interests in this case warrants use of the preponderance standard, which allows both parties to share the risk of error in roughly equal fashion. While defendants face the risk of opprobrium that may result from a finding of fraudulent conduct, defrauded investors are among the very individuals Congress sought to protect in the securities laws, and if they prove that it is more likely than not that they were defrauded, they should recover. Pp. 387-391.
640 F.2d 534, affirmed in part, reversed in part, and remanded.
James L. Truitt, Dallas, Tex., for Herman & MacLean.
Robert H. Jaffe, Springfield, N.J., for Huddleston, et al., and Paul Gonson, Washington, D.C., for Securities and Exchange Commission as amicus curiae by special leave of Court.
Justice MARSHALL delivered the opinion of the Court.
These consolidated cases raise two unresolved questions concerning Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b). The first is whether purchasers of registered securities who allege they were defrauded by misrepresentations in a registration statement may maintain an action under Section 10(b) notwithstanding the express remedy for misstatements and omissions in registration statements provided by Section 11 of the Securities Act of 1933, 15 U.S.C. § 77k. The second question is whether persons seeking recovery under Section 10(b) must prove their cause of action by clear and convincing evidence rather than by a preponderance of the evidence.
* In 1969 Texas International Speedway, Inc. ("TIS"), filed a registration statement and prospectus with the Securities and Exchange Commission offering a total of $4,398,900 in securities to the public. The proceeds of the sale were to be used to finance the construction of an automobile speedway. The entire issue was sold on the offering date, October 30, 1969. TIS did not meet with success, however, and the corporation filed a petition for bankruptcy on November 30, 1970.
In 1972 plaintiffs Huddleston and Bradley instituted a class action in the United States District Court for the Southern District of Texas1 on behalf of themselves and other purchasers of TIS securities. The complaint alleged violations of Section 10(b) of the Securities Exchange Act of 1934 ("the 1934 Act") and SEC Rule 10b-5 promulgated thereunder, 17 CFR 240.10b-5.2 Plaintiffs sued most of the participants in the offering, including the accounting firm, Herman & MacLean, which had issued an opinion concerning certain financial statements and a pro forma balance sheet3 that were contained in the registration statement and prospectus. Plaintiffs claimed that the defendants had engaged in a fraudulent scheme to misrepresent or conceal material facts regarding the financial condition of TIS, including the costs incurred in building the speedway.
After a three-week trial, the District Judge submitted the case to the jury on special interrogatories relating to liability. The judge instructed the jury that liability could be found only if the defendants acted with scienter.4 The judge also instructed the jury to determine whether plaintiffs had proven their cause of action by a preponderance of the evidence. After the jury rendered a verdict in favor of the plaintiffs on the submitted issues, the judge concluded that Herman & MacLean and others had violated Section 10(b) and Rule 10b-5 by making fraudulent misrepresentations in the TIS registration statement.5 The court then determined the amount of damages and entered judgment for the plaintiffs.
On appeal, the United States Court of Appeals for the Fifth Circuit held that a cause of action may be maintained under Section 10(b) of the 1934 Act for fraudulent misrepresentations and omissions even when that conduct might also be actionable under Section 11 of the Securities Act of 1933 ("the 1933 Act"). Huddleston v. Herman & MacLean, 640 F.2d 534, 540-543 (1981). However, the Court of Appeals disagreed with the District Court as to the appropriate standard of proof for an action under Section 10(b), concluding that a plaintiff must prove his case by "clear and convincing" evidence. Id., at 545-546. The Court of Appeals reversed the District Court's judgment on other grounds and remanded the case for a new trial. Id., at 547-550, 560.
We granted certiorari to consider whether an implied cause of action under Section 10(b) of the 1934 Act will lie for conduct subject to an express civil remedy under the 1933 Act, an issue we have previously reserved,6 and to decide the standard of proof applicable to actions under Section 10(b).7 --- U.S. ----, 102 S.Ct. 1766, 72 L.Ed.2d 173 (1982). We now affirm the court of appeals' holding that plaintiffs could maintain an action under Section 10(b) of the 1934 Act, but we reverse as to the applicable standard of proof.
The Securities Act of 1933 and the Securities Exchange Act of 1934 "constitute interrelated components of the federal regulatory scheme governing transactions in securities." Ernst & Ernst v. Hochfelder, 425 U.S. 185, 206, 96 S.Ct. 1375, 1387, 47 L.Ed.2d 668 (1976). The Acts created several express private rights of action,8 one of which is contained in Section 11 of the 1933 Act. In addition to the private actions created explicitly by the 1933 and 1934 Acts, federal courts have implied private remedies under other provisions of the two laws.9 Most significantly for present purposes, a private right of action under Section 10(b) of the 1934 Act and Rule 10b-5 has been consistently recognized for more than 35 years.10 The existence of this implied remedy is simply beyond peradventure.
The issue in this case is whether a party should be barred from invoking this established remedy for fraud because the allegedly fraudulent conduct would apparently also provide the basis for a damage action under Section 11 of the 1933 Act.11 The resolution of this issue turns on the fact that the two provisions involve distinct causes of action and were intended to address different types of wrongdoing.
Section 11 of the 1933 Act allows purchasers of a registered security to sue certain enumerated parties in a registered offering when false or misleading information is included in a registration statement. The section was designed to assure compliance with the disclosure provisions of the Act by imposing a stringent standard of liability12 on the parties who play a direct role in a registered offering.13 If a plaintiff purchased a security issued pursuant to a registration statement, he need only show a material misstatement or omission to establish his prima facie case. Liability against the issuer of a security is virtually absolute,14 even for innocent misstatements. Other defendants bear the burden of demonstrating due diligence. See 15 U.S.C. § 77k(b).
Although limited in scope, Section 11 places a relatively minimal burden on a plaintiff. In contrast, Section 10(b) is a "catchall" antifraud provision,15 but it requires a plaintiff to carry a heavier burden to establish a cause of action. While a Section 11 action must be brought by a purchaser of a registered security, must be based on misstatements or omissions in a registration statement, and can only be brought against certain parties, a Section 10(b) action can be brought by a purchaser or seller of "any security" against "any person" who has used "any manipulative or deceptive device or contrivance" in connection with the purchase or sale of a security. 15 U.S.C. § 78j (emphasis added). However, a Section 10(b) plaintiff carries a heavier burden than a Section 11 plaintiff. Most significantly, he must prove that the defendant acted with scienter, i.e., with intent to deceive, manipulate, or defraud.16
Since Section 11 and Section 10(b) address different types of wrongdoing, we see no reason to carve out an exception to Section 10(b) for fraud occurring in a registration statement just because the same conduct may also be actionable under Section 11.17 Exempting such conduct from liability under Section 10(b) would conflict with the basic purpose of the 1933 Act: to provide greater protection to purchasers of registered securities. It would be anomalous indeed if the special protection afforded to purchasers in a registered offering by the 1933 Act were deemed to deprive such purchasers of the protections against manipulation and deception that Section 10(b) makes available to all persons who deal in securities.
While some conduct actionable under Section 11 may also be actionable under Section 10(b), it is hardly a novel proposition that the Securities Exchange Act and the Securities Act "prohibit some of the same conduct." United States v. Naftalin, 441 U.S. 768, 778, 99 S.Ct. 2077, 2084, 60 L.Ed.2d 624 (1979) (applying Section 17(a) of the 1933 Act to conduct also prohibited by Section 10(b) of the 1934 Act in an action by the SEC). " 'The fact that there may well be some overlap is neither unusual nor unfortunate.' " Ibid., quoting SEC v. National Securities, Inc., 393 U.S. 453, 468, 89 S.Ct. 564, 572, 21 L.Ed.2d 668 (1969). In savings clauses included in the 1933 and 1934 Acts, Congress rejected the notion that the express remedies of the securities laws would preempt all other rights of action. Section 16 of the 1933 Act states unequivocally that "[t]he rights and remedies provided by this subchapter shall be in addition to any and all other rights and remedies that may exist at law or in equity." 15 U.S.C. § 77p. Section 28(a) of the 1934 Act contains a parallel provision. 15 U.S.C. § 78bb(a). These provisions confirm that the remedies in each Act were to be supplemented by "any and all" additional remedies.
This conclusion is reinforced by our reasoning in Ernst & Ernst v. Hochfelder, supra, which held that actions under Section 10(b) require proof of scienter and do not encompass negligent conduct. In so holding, we noted that each of the express civil remedies in the 1933 Act allowing recovery for negligent conduct is subject to procedural restrictions not applicable to a Section 10(b) action.18 425 U.S., at 208-210, 96 S.Ct., at 1388-89. We emphasized that extension of Section 10(b) to negligent conduct would have allowed causes of action for negligence under the express remedies to be brought instead under Section 10(b), "thereby nullify[ing] the effectiveness of the carefully drawn procedural restrictions on these express actions." Id., at 210, 96 S.Ct., at 1389 (footnote omitted). In reasoning that scienter should be required in Section 10(b) actions in order to avoid circumvention of the procedural restrictions surrounding the express remedies, we necessarily assumed that the express remedies were not exclusive. Otherwise there would have been no danger of nullification. Conversely, because the added burden of proving scienter attaches to suits under Section 10(b), invocation of the Section 10(b) remedy will not "nullify" the procedural restrictions that apply to the express remedies.19
This cumulative construction of the remedies under the 1933 and 1934 Acts is also supported by the fact that, when Congress comprehensively revised the securities laws in 1975, a consistent line of judicial decisions had permitted plaintiffs to sue under Section 10(b) regardless of the availability of express remedies. In 1975 Congress enacted the "most substantial and significant revision of this country's Federal securities laws since the passage of the Securities Exchange Act in 1934."20 See Securities Acts Amendments of 1975, Pub.L. No. 94-29, 89 Stat. 97. When Congress acted, federal courts had consistently and routinely permitted a plaintiff to proceed under Section 10(b) even where express remedies under Section 11 or other provisions were available.21 In light of this well-established judicial interpretation, Congress' decision to leave Section 10(b) intact suggests that Congress ratified the cumulative nature of the Section 10(b) action. See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, --- U.S. ----, ----, 102 S.Ct. 1825, 1841, 72 L.Ed.2d 182 (1982); Lorillard v. Pons, 434 U.S. 575, 580-581, 98 S.Ct. 866, 870, 55 L.Ed.2d 40 (1978).
A cumulative construction of the securities laws also furthers their broad remedial purposes. In enacting the 1934 Act, Congress stated that its purpose was "to impose requirements necessary to make [securities] regulation and control reasonably complete and effective." 15 U.S.C. § 78b. In furtherance of that objective, Section 10(b) makes it unlawful to use "any manipulative or deceptive device or contrivance" in connection with the purchase or sale of any security. The effectiveness of the broad proscription against fraud in Section 10(b) would be undermined if its scope were restricted by the existence of an express remedy under Section 11.22 Yet we have repeatedly recognized that securities laws combating fraud should be construed "not technically and restrictively, but flexibly to effectuate [their] remedial purposes." SEC v. Capital Gains Research Bureau, 375 U.S. 180, 195, 84 S.Ct. 275, 284, 11 L.Ed.2d 237 (1963). Accord: Superintendent of Insurance v. Bankers Life & Cas. Co., 404 U.S. 6, 12, 92 S.Ct. 165, 169, 30 L.Ed.2d 128 (1971); Affiliated Ute Citizens v. United States, 406 U.S. 128, 151, 92 S.Ct. 1456, 1471, 31 L.Ed.2d 741 (1972). We therefore reject an interpretation of the securities laws that displaces an action under Section 10(b).23
Accordingly, we hold that the availability of an express remedy under Section 11 of the 1933 Act does not preclude defrauded purchasers of registered securities from maintaining an action under Section 10(b) of the 1934 Act. To this extent the judgment of the court of appeals is affirmed.
In a typical civil suit for money damages, plaintiffs must prove their case by a preponderance of the evidence.24 Similarly, in an action by the SEC to establish fraud under Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), we have held that proof by a preponderance of the evidence suffices to establish liability. SEC v. C.M. Joiner Leasing Corp., 320 U.S. 344, 355, 64 S.Ct. 120, 125, 88 L.Ed. 88 (1943). "Where . . . proof is offered in a civil action, as here, a preponderance of the evidence will establish the case . . . ." Ibid. The same standard applies in administrative proceedings before the SEC25 and has been consistently employed by the lower courts in private actions under the securities laws.26
The Court of Appeals nonetheless held that plaintiffs in a Section 10(b) suit must establish their case by clear and convincing evidence. The Court of Appeals relied primarily on the traditional use of a higher burden of proof in civil fraud actions at common law. 640 F.2d, at 545-546. Reference to common law practices can be misleading, however, since the historical considerations underlying the imposition of a higher standard of proof have questionable pertinence here.27 See Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 744-745, 95 S.Ct. 1917, 1929, 44 L.Ed.2d 539 (1975) ("[T]he typical fact situation in which the classic tort of misrepresentation and deceit evolved was light years from the world of commercial transactions to which Rule 10b-5 is applicable."). Moreover, the antifraud provisions of the securities laws are not coextensive with common law doctrines of fraud.28 Indeed, an important purpose of the federal securities statutes was to rectify perceived deficiencies in the available common law protections by establishing higher standards of conduct in the securities industry. See SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 186, 84 S.Ct. 275, 279, 11 L.Ed.2d 237 (1963). We therefore find reference to the common law in this instance unavailing.
Where Congress has not prescribed the appropriate standard of proof and the Constitution does not dictate a particular standard, we must prescribe one. See Steadman v. SEC, 450 U.S. 91, 95, 101 S.Ct. 999, 1004, 67 L.Ed.2d 69 (1981). See generally Blue Chip Stamps v. Manor Drug Stores, supra, 421 U.S., at 749, 95 S.Ct., at 1931 (private cause of action under Section 10(b) and Rule 10b-5 must be judicially delimited until Congress acts). In doing so, we are mindful that a standard of proof "serves to allocate the risk of error between the litigants and to indicate the relative importance attached to the ultimate decision." Addington v. Texas, 441 U.S. 418, 423, 99 S.Ct. 1804, 1808, 60 L.Ed.2d 323 (1979). See also In re Winship, 397 U.S. 358, 370-371, 90 S.Ct. 1068, 1075, 25 L.Ed.2d 368 (1970) (Harlan, J., concurring). Thus, we have required proof by clear and convincing evidence where particularly important individual interests or rights are at stake. See, e.g., Santosky v. Kramer, --- U.S. ----, 102 S.Ct. 1388, 71 L.Ed.2d 599 (1982) (proceeding to terminate parental rights); Addington v. Texas, supra (involuntary commitment proceeding); Woodby v. INS, 385 U.S. 276, 285-286, 87 S.Ct. 483, 487, 17 L.Ed.2d 362 (1966) (deportation).29 By contrast, imposition of even severe civil sanctions that do not implicate such interests has been permitted after proof by a preponderance of the evidence. See, e.g., United States v. Regan, 232 U.S. 37, 48-49, 34 S.Ct. 213, 217, 58 L.Ed. 494 (1914) (proof by a preponderance of the evidence suffices in civil suits involving proof of acts that expose a party to a criminal prosecution). Thus, in interpreting a statutory provision in Steadman v. SEC, supra, we upheld use of the preponderance standard in SEC administrative proceedings concerning alleged violations of the antifraud provisions. The sanctions imposed in the proceedings included an order permanently barring an individual from practicing his profession. And in SEC v. C.M. Joiner Leasing Corp., 320 U.S., at 355, 64 S.Ct., at 125, we held that a preponderance of the evidence suffices to establish fraud under Section 17(a) of the 1933 Act.
A preponderance-of-the-evidence standard allows both parties to "share the risk of error in roughly equal fashion." Addington v. Texas, 421 U.S., at 423, 99 S.Ct., at 1808. Any other standard expresses a preference for one side's interests. The balance of interests in this case warrants use of the preponderance standard. On the one hand, the defendants face the risk of opprobrium that may result from a finding of fraudulent conduct, but this risk is identical to that in an action under Section 17(a), which is governed by the preponderance-of-the-evidence standard. The interests of defendants in a securities case do not differ qualitatively from the interests of defendants sued for violations of other federal statutes such as the antitrust or civil rights laws, for which proof by a preponderance of the evidence suffices. On the other hand, the interests of plaintiffs in such suits are significant. Defrauded investors are among the very individuals Congress sought to protect in the securities laws. If they prove that it is more likely than not that they were defrauded, they should recover.
We therefore decline to depart from the preponderance-of-the-evidence standard generally applicable in civil actions.30 Accordingly, the Court of Appeals' decision as to the appropriate standard of proof is reversed.
The judgment of the Court of Appeals is affirmed in part and reversed in part and otherwise remanded for proceedings consistent with this opinion.
It is so ordered.
Justice POWELL took no part in the decision of these cases.
The case was transferred to the United States District Court for the Northern District of Texas in January, 1973.
Plaintiffs also alleged violations of, inter alia, Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77q(a). We have previously reserved decision on whether Section 17(a) affords a private remedy, International Brotherhood of Teamsters v. Daniel, 439 U.S. 551, 557, n. 9, 99 S.Ct. 790, 795, n. 9, 58 L.Ed.2d 808 (1979), and we do so once again. Plaintiffs have abandoned their Section 17(a) claim, Brief, at 4, n. 6, and the Court of Appeals did not address the existence of a separate cause of action under Section 17(a). Accordingly, there is no need for us to decide the issue.
A pro forma balance sheet is one prepared on the basis of assumptions as to future events.
The judge stated that reckless behavior could satisfy the scienter requirement. While this instruction reflects the prevailing view of the courts of appeals that have addressed the issue, see McLean v. Alexander, 599 F.2d 1190, 1197, and n. 12 (CA3 1979) (collecting cases), we have explicitly left open the question whether recklessness satisfies the scienter requirement. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 194, n. 12, 96 S.Ct. 1375, 1381, n. 12, 47 L.Ed.2d 668 (1976).
The trial court also found that Herman & MacLean had aided and abetted violations of Section 10(b). While several courts of appeals have permitted aider and abettor liability, see IIT, An International Investment Trust v. Cornfeld, 619 F.2d 909, 922 (CA2 1980) (collecting cases), we specifically reserved this issue in Ernst & Ernst v. Hochfelder, supra, 425 U.S., at 191-192, n. 7, 96 S.Ct., at 1380, n. 7. Cf. Merrill Lynch, Pierce, Fenner & Smith v. Curran, --- U.S. ----, ----, 102 S.Ct. 1825, 1847-48, 72 L.Ed.2d 182 (1982) (discussing liability for participants in a conspiracy under analogous Commodity Exchange Act provision).
See, e.g., Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 752 n. 15, 95 S.Ct. 1917, 1933 n. 15, 44 L.Ed.2d 539 (1975).
The Fifth Circuit's adoption of a clear-and-convincing-evidence standard in a private action under Section 10(b) appears to be unprecedented. See E. Devitt & C. Blackmar, Federal Jury Practice and Instructions § 98.04, at 930 (1981 Cum.Supp.). Other courts have employed a preponderance-of-the-evidence standard in private actions under the securities laws. See, e.g., Mihara v. Dean Witter & Co., 619 F.2d 814, 824-825 (CA9 1980); Dzenits v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 494 F.2d 168, 171, n. 2 (CA10 1974); Globus v. Law Research Service, Inc., 418 F.2d 1276, 1291 (CA2 1969), cert. denied, 397 U.S. 913, 90 S.Ct. 913, 25 L.Ed.2d 93 (1970); Franklin Life Insurance Co. v. Commonwealth Edison Co., 451 F.Supp. 602, 607 (SD Ill.1978), aff'd per curiam, 598 F.2d 1109 (CA7), cert. denied, 444 U.S. 900, 100 S.Ct. 210, 62 L.Ed.2d 136 (1979).
Securities Act, §§ 11, 12, 15, 15 U.S.C. §§ 77k, 77l, 77o; Securities Exchange Act, §§ 9, 16, 18, 15 U.S.C. §§ 78i, 78p, 78r.
See, e.g., J.I. Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1556, 12 L.Ed.2d 423 (1964) (Section 14(a) of the Securities Exchange Act); Dan River, Inc. v. Unitex Ltd., 624 F.2d 1216 (CA4 1980), cert. denied, 449 U.S. 1101, 101 S.Ct. 896, 66 L.Ed.2d 827 (1981) (Section 13 of the Securities Exchange Act); Kirshner v. United States, 603 F.2d 234, 241 (CA2 1978), cert. denied, 442 U.S. 909, 99 S.Ct. 2821, 61 L.Ed.2d 274 (1979) (Section 17(a) of the Securities Act). But see, e.g., Touche Ross & Co. v. Redington, 442 U.S. 560, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979) (no implied private right of action under Section 17(a) of the Securities Exchange Act); Piper v. Chris-Craft Industries, Inc., 430 U.S. 1, 97 S.Ct. 926, 51 L.Ed.2d 124 (1977) (defeated tender offeror has no implied private right of action under Section 14(e) of the Securities Exchange Act).
The right of action was first recognized in Kardon v. National Gypsum Co., 69 F.Supp. 512 (ED Pa.1946). By 1961, four courts of appeals and several district courts in other circuits had recognized the existence of a private remedy under Section 10(b) and Rule 10b-5, and only one district court decision had reached a contrary conclusion. See III L. Loss, Securities Regulation 1763-1764 and nn. 260-263 (2d ed.1961) (collecting cases). By 1969, the existence of a private cause of action had been recognized by ten of the eleven courts of appeals. See VI L. Loss, Securities Regulation 3871-3873 (2d ed. Supp.1969) (collecting cases). When the question whether an implied cause of action can be brought under Section 10(b) and Rule 10b-5 was first considered in this Court, we confirmed the existence of such a cause of action without extended discussion. See Superintendent of Insurance v. Bankers Life & Cas. Co., 404 U.S. 6, 13, n. 9, 92 S.Ct. 165, 169, n. 9, 30 L.Ed.2d 128 (1971). We have since repeatedly reaffirmed that "the existence of a private cause of action for violations of the statute and the Rule is now well established." Ernst & Ernst v. Hochfelder, supra, 425 U.S., at 196, 96 S.Ct., at 1382 (citing prior cases).
The Court of Appeals noted that the plaintiffs "apparently did have a Section 11 remedy." 640 F.2d, at 541, n. 5. While accurate as to the two other defendants, this conclusion may be open to question with respect to Herman & MacLean. Accountants are liable under Section 11 only for those matters which purport to have been prepared or certified by them. 15 U.S.C. § 77k(a)(4). Herman & MacLean contends that it did not "expertise" at least some of the materials that were the subject of the lawsuit, Tr. of Oral Arg. at 6-8, which if true could preclude a Section 11 remedy with respect to these materials.
See H.R.Rep. No. 85, 73d Cong., 1st Sess. 9 (1933) (Section 11 creates "correspondingly heavier legal liability" in line with responsibility to the public).
A Section 11 action can be brought only against the issuer, its directors or partners, underwriters, and accountants who are named as having prepared or certified the registration statement. See 15 U.S.C. § 77k(a). At the same time, Sections 3 and 4 of the 1933 Act exclude a wide variety of securities (such as those issued by the government and certain banks) and transactions (such as private ones and certain small offerings) from the registration requirement. § 77c and d.
See Feit v. Leasco Data Processing Equipment Corp., 332 F.Supp. 544, 575 (EDNY 1971); R. Jennings & H. Marsh, Securities Regulation 828-829 (1977).
See Chiarella v. United States, 445 U.S. 222, 234-235, 100 S.Ct. 1108, 1117, 63 L.Ed.2d 348 (1980).
See Ernst & Ernst v. Hochfelder, supra, 425 U.S. at 193, 96 S.Ct., at 1380.
Cf. Mills v. Electric Auto-Lite, 396 U.S. 375, 390-391, 90 S.Ct. 616, 624, 24 L.Ed.2d 593 (1970) (existence of express provisions for recovery of attorneys' fees in §§ 9(e) and 18(a) of 1934 Act does not preclude award of attorneys' fees under § 14(a) of the Act).
For example, a plaintiff in a Section 11 action may be required to post a bond for costs, 15 U.S.C. § 77k(e), and the statute of limitations is only one year, § 77m. In contrast, Section 10(b) contains no provision requiring plaintiffs to post security for costs. Also, courts look to the most analogous statute of limitations of the forum state, which is usually longer than the period provided for Section 11 actions. See Ernst & Ernst v. Hochfelder, supra, 425 U.S., at 210, n. 29, 96 S.Ct., at 1389, n. 29.
See Fischman v. Raytheon Mfg. Co., 188 F.2d 783, 786-787 (CA2 1951); A. Bromberg & L. Lowenfels, Securities Fraud & Commodities Fraud § 2.4(403), at 2:179-2:180 (1982).
Securities Acts Amendments of 1975: Hearings on S. 249 Before the Subcomm. on Securities of the Senate Comm. on Banking, Housing and Urban Affairs, 94th Cong., 1st Sess. 1 (1975). As the conference report on the legislation explained, the 1975 amendments were the culmination of "the most searching reexamination of the competitive, statutory, and economic issues facing the securities markets, the securities industry, and, of course, public investors, since the 1930's." H.R.Rep. No. 94-229, 94th Cong., 1st Sess. 91 (1975), U.S.Code Cong. & Admin.News 1975, pp. 179, 322.
See, e.g., Schaefer v. First National Bank, 509 F.2d 1287, 1292-1293 (CA7 1975), cert. denied, 425 U.S. 943, 96 S.Ct. 1682, 48 L.Ed.2d 186 (1976); Wolf v. Frank, 477 F.2d 467, 475 (CA5), cert. denied, 414 U.S. 975, 94 S.Ct. 287, 38 L.Ed.2d 218 (1973); Jordan Bldg. Corp. v. Doyle, O'Connor & Co., 401 F.2d 47, 51 (CA7 1968); Ellis v. Carter, 291 F.2d 270, 273-274 (CA9 1961); Fischman v. Raytheon Mfg. Co., supra, 188 F.2d, at 786-787; Orn v. Eastman Dillon, Union Sec. & Co., 364 F.Supp. 352, 355 (C.D.Cal.1973); Stewart v. Bennett, 359 F.Supp. 878, 886 (D.Mass.1973); Trussell v. United Underwriters, Ltd., 228 F.Supp. 757, 765-766 (D.Colo.1964). Cf. Gilbert v. Nixon, 429 F.2d 348, 355 (CA10 1970) (recognizing overlapping actions but resolving conflict in favor of express remedy where that remedy is "explicit"). Two early district court decisions had refused to recognize an action under Rule 10b-5 in the face of overlap with Section 11. Rosenberg v. Globe Aircraft Corp., 80 F.Supp. 123 (ED Pa.1948); Montague v. Electronic Corp. of America, 76 F.Supp. 933 (SDNY 1948). The latter case was not subsequently followed in the Southern District, e.g., Osborne v. Mallory, 86 F.Supp. 869 (SDNY 1949), and it has no precedential value in light of the Second Circuit's decision in Fischman v. Raytheon Mfg. Co., supra. The Rosenberg decision stood alone at the time of the 1975 amendments, and even that decision had not been followed in the district in which it was decided, Premier Industries, Inc. v. Delaware Valley Financial Corp., 185 F.Supp. 694 (ED Pa.1960), or elsewhere within the same circuit, Dauphin Corp. v. Redwall Corp., 201 F.Supp. 466 (D.Del.1962). Since the 1975 amendments, the lower courts have continued to recognize that an implied cause of action under Section 10(b) can be brought regardless of whether express remedies are available. See, e.g., Berger v. Bishop Investment Corp., 695 F.2d 302 (CA8 1982); Wachovia Bank & Trust Co. v. National Student Marketing Corp., 650 F.2d 342, 354-359 (CADC 1980), cert. denied, 452 U.S. 954, 101 S.Ct. 3098, 69 L.Ed.2d 965 (1981); Ross v. A.H. Robins Co., 607 F.2d 545, 551-556 (CA2 1979), cert. denied, 446 U.S. 946, 100 S.Ct. 2175, 64 L.Ed.2d 802 (1980); Pearlstein v. Justice Mortgage Investors,  CCH Fed.Sec.L.Rptr. ¶ 96,760 at 94,973-94,974 (ND Tex.1978); In re Clinton Oil Company Securities Litigation, [1977-1978] CCH Fed.Sec.L.Rptr. ¶ 96,015 at 91,575 (D.Kan.1977).
Moreover, certain individuals who play a part in preparing the registration statement generally cannot be reached by a Section 11 action. These include corporate officers other than those specified in 15 U.S.C. § 77k(a), lawyers not acting as "experts," and accountants with respect to parts of a registration statement which they are not named as having prepared or certified. If, as Herman & MacLean argues purchasers in registered offerings were required to rely solely on Section 11, they would have no recourse against such individuals even if the excluded parties engaged in fraudulent conduct while participating in the registration statement. The exempted individuals would be immune from federal liability for fraudulent conduct even though Section 10(b) extends to "any person" who engages in fraud in connection with a purchase or sale of securities.
We also reject application of the maxim of statutory construction, expressio unius est exclusio alterius. See H. Hart & A. Sacks, The Legal Process: Basic Problems in the Making and Application of Law 1173-1174 (tent. ed. 1958); Note, Implying Civil Remedies from Federal Regulatory Statutes, 77 Harv.L.Rev. 285, 290-291 (1963). As we stated in SEC v. Joiner Corp., 320 U.S. 344, 350-351, 64 S.Ct. 120, 123, 88 L.Ed. 88 (1943), such canons "long have been subordinated to the doctrine that courts will construe the details of an act in conformity with its dominating general purpose." See generally Silver v. New York Stock Exchange, 373 U.S. 341, 357, 83 S.Ct. 1246, 1257, 10 L.Ed.2d 389 (1963) (favoring "an analysis which reconciles the operation of both statutory schemes with one another rather than holding one completely ousted"). We believe the maxim cannot properly be applied to a situation where the remedies redress different misconduct and where the remedial purposes of the Acts would be undermined by a presumption of exclusivity.
See note 7, supra.
A higher standard of proof apparently arose in courts of equity when the chancellor faced claims that were unenforceable at law because of the Statute of Wills, the Statute of Frauds, or the parole evidence rule. See Note, Appellate Review in the Federal Courts of Findings Requiring More than a Preponderance of the Evidence, 60 Harv.L.Rev. 111, 112 (1946). Concerned that claims would be fabricated, the chancery courts imposed a more demanding standard of proof. The higher standard subsequently received wide acceptance in equity proceedings to set aside presumptively valid written instruments on account of fraud. See United States v. American Bell Telephone Co., 167 U.S. 224, 240-241, 17 S.Ct. 809, 810, 42 L.Ed. 144 (1897); Southern Development Co. v. Silva, 125 U.S. 247, 249-250, 8 S.Ct. 881, 882, 31 L.Ed. 678 (1888); Colorado Coal Co. v. United States, 123 U.S. 307, 316-319, 8 S.Ct. 131, 135-37, 31 L.Ed. 182 (1887); Maxwell Land-Grant Case, 121 U.S. 325, 381, 7 S.Ct. 1015, 1028, 30 L.Ed. 949 (1887) ("We take the general doctrine to be, that when in a court of equity it is proposed to set aside, to annul or to correct a written instrument for fraud or mistake in the execution of the instrument itself, the testimony on which this is done must be clear, unequivocal, and convincing, and that it cannot be done upon a bare preponderance of evidence which leaves the issue in doubt."). Such proceedings bear little relationship to modern lawsuits under the federal securities laws.
See SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 194, 84 S.Ct. 275, 284, 11 L.Ed.2d 237 (1963) (common law doctrines of fraud which developed around transactions involving tangible items of wealth are ill-suited to the sale of intangibles such as securities); III L. Loss, Securities Regulation 1435 (2d ed. 1961).
In Vance v. Terrazas, 444 U.S. 252, 266, 100 S.Ct. 540, 548, 62 L.Ed.2d 461 (1980), we held that the Due Process Clause did not require proof beyond a preponderance of the evidence even in an expatriation proceeding. Cf. Nishikawa v. Dulles, 356 U.S. 129, 135-136, 78 S.Ct. 612, 616, 2 L.Ed.2d 659 (1958) (in the absence of evidence of congressional intent to adopt a particular standard of proof, Court imposes clear-and-convincing-evidence standard in expatriation cases).
The Court of Appeals also noted that the proof of scienter required in fraud cases is often a matter of inference from circumstantial evidence. If anything, the difficulty of proving the defendant's state of mind supports a lower standard of proof. In any event, we have noted elsewhere that circumstantial evidence can be more than sufficient. Michalic v. Cleveland Tankers, Inc., 364 U.S. 325, 330, 81 S.Ct. 6, 10, 5 L.Ed.2d 20 (1960). See TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 463, and n. 24, 96 S.Ct. 2126, 2139, and n. 24, 48 L.Ed.2d 757 (1976).