Section 11 of the Securities Act—A Proposal for Allocating Liability

Section 11 gives each non-issuer participant a right to recover contribution from the other participants subject to liability. This comment will show how the right to contribution may be used to make the consequences of participating in registration more predictable, by limiting a non-issuer participant's potential liability to the consequences of his own carelessness. Part I will review briefly the registration requirement, which determines the incidence of section 11 liability. Part I will then discuss the section 11 cause of action, and demonstrate the importance and function of the right to recover contribution.

Finally, Part III will analyze the right to contribution, and consider how predictable results may be achieved through use of a contribution agreement that does not amount to an unenforceable indemnity agreement. This discussion of the section 11 civil remedy may also be of interest to those advocating an expansion of the section 11 cause of action to other areas of securities law