478 U.S. 647 (1986)
Petitioners brought suit against respondent, alleging securities fraud and raising claims under § 12(2) of the Securities Act of 1933, 15 U.S.C.S. § 771(2), and § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78j(b).
The district court found for petitioners and held that the remedy of rescission was proper under § 12(2). The court of appeals sustained respondent's liability, but reversed the rescissory award and remanded. On remand, the district court calculated petitioners' damages as the purchase price of a partnership plus simple interest, minus net tax benefits. Both petitioners and respondent appealed. The court of appeals held that tax benefits were a form of income received within the meaning of § 12(2) and recalculated and decreased petitioners' award. Petitioners appealed.
- The court held that § 12(2) did not authorize an offset of tax benefits received by petitioners against their rescissory recovery either as "income received" or as a return of "consideration."
The court reversed and remanded. The court held that the recovery available under the Securities Act of 1933 and the Securities Exchange Act of 1934 to rescind a fraudulent transaction or obtain rescissory damages should not be reduced by tax benefits petitioners received from a tax shelter investment.
Suggested Study Aids For Securities Regulation Law
Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials