ligence does NOT constitute a lack of due diligence, although a plaintiff's intentional misconduct and his own recklessness (if D was merely reckless) will bar recovery.
b) In pari delicto - a private suit for damages under rule 10b-5 will be barred if:
1) The plaintiff bears substantially equal responsibility for the violations, AND
2) Preclusion of the suit would not significantly interfere with the enforcement of securities law.
16.REMEDIES
a) Out-of-pocket Damages - this is the difference between the price paid for stock and its actual value.
1) Compare - benefit-of-the-bargain damages - these are measured by the value of the stock as it really is and the value it would have had if a misrepresentation had been true.
2) Standard measure of conventional damages - out-of-pocket damages is the standard measure in private actions under rule 10b-5; benefit-of-the-bargain damages are usually not granted.
b) Restitutionary Relief - this may be sought instead of conventional damages:
1) Rescission - returns the parties to their status quo before the transaction
2) Rescissionary or Restitutionary damages - money equivalent of rescission
3) Difference between conventional damages and Restitutionary relief - out-of-pocket damages are based on the P's loss, while Restitutionary relief is based on the D's wrongful gain. Rescission or Rescissionary damages may be attractive remedies when the value of the stock changed radically after the transaction. However, Restitutionary relief is usually unavailable in cases involving publicly held stock.
c) Remedies Available to the Government - although the SEC cannot sue for damages, it can pursue several remedies including special monetary remedies:
1) Injunctive Relief - the SEC often seeks injunctive relief accompanied with a request for disgorgement of profits or other payments that can be subject to criminal sanctions (fines and jail sentences) and civil penalties (up to three times the profit gained or loss avoided).
17.JURISDICTION, VENUE, AND SERVICE OF PROCESS - suits under 10b-5 are based on the 1934 Act, and exclusive jurisdiction is in the federal district courts. State claims arising out of the same transactions may be joined with the federal claim under the supplemental jurisdiction doctrine. Venue can be wherever any act or transaction constituting a violation occurred, or where the D is found or transacts business. Process can be served where the D can be found or where he lives. p> 18.STATUTE OF LIMITATIONS - the 1934 Act contains no SOL; however, the SCt has held that private actions must be brought within one year after discovery of the relevant facts and within three years following accrual of the cause of action. The tolling doctrine is inapplicable. p> a) Exceptions - the time limitations don't apply to all rule 10b-5 private actions, eg, SEC limitat...
