Arkansas Code
Subchapter 1 - General Provisions
§ 23-42-106. Civil liability — Definitions

(a)
(1) A person is liable to a buyer of a security if the person offers or sells the security:
(A) In violation of § 23-42-212(b), § 23-42-301, or § 23-42-501(1) or (2), a rule or order of the Securities Commissioner under § 23-42-502 which requires the affirmative approval of sales literature before it is used, or any condition imposed under § 23-42-403(d), § 23-42-404(g), or § 23-42-404(i); or
(B) By means of an untrue statement of a material fact or a failure to state a material fact necessary in order to make the statement made, in the light of circumstances under which it is made, not misleading, the buyer not knowing of the untruth or omission, and the seller not sustaining the burden of proof that the seller did not know, and in the exercise of reasonable care could not have known, of the untruth or omission.

(2) In a successful action under subdivision (a)(1) of this section, the buyer may recover costs and reasonable attorney's fees plus:
(A) Upon tender of the security, the consideration paid for the security and interest at six percent (6%) per year from the date of payment, less the amount of any income received from owning the security; or
(B)
(i) Damages if the buyer no longer owns the security.
(ii) Damages are the amount that would be recoverable upon a tender of the security less the value of the security when the buyer disposed of the security plus interest at six percent (6%) per year from the date of disposition of the security.

(b)
(1) A person is liable to a seller of a security if the person buys the security:
(A) In violation of § 23-42-301, § 23-42-307, § 23-42-507, or § 23-42-508; or
(B) By means of an untrue statement of a material fact or a failure to state a material fact necessary in order to make the statement made, in light of the circumstances under which it is made, not misleading, the seller not knowing of the untruth or omission, and the buyer not sustaining the burden of proof that the buyer did not know, and in the exercise of reasonable care could not have known, of the untruth or omission.

(2)
(A) In a successful action under subdivision (b)(1) of this section, the seller may recover costs and reasonable attorney's fees plus:
(i) Upon tender of the consideration the seller received in a transaction under subdivision (b)(1) of this section:
(a) The security; or
(b) The security plus any income or other distributions in cash or other property received directly or indirectly by the purchaser; or

(ii)
(a) Damages together with interest at six percent (6%) per year from the date of purchase.
(b) Damages may include out-of-pocket losses or losses for the benefit of the bargain.

(B) A tender made under subdivision (b)(2)(A)(i) of this section only requires notice in writing of the present ability to pay the amount tendered and willingness to take the security for the amount specified.

(c)
(1) A person that directly or indirectly receives consideration for providing investment advice to another party:
(A) In violation of § 23-42-301 is liable to the other party for:
(i) The consideration paid for the advice;
(ii) Interest at the rate of six percent (6%) per year from the date of payment;
(iii) Costs; and
(iv) Reasonable attorney's fees; or

(B) By employing a device, scheme, or artifice to defraud the other party or by engaging in an act, practice, or course of business that operates or would operate as a fraud or deceit upon the other party is liable to the other party for:
(i) The consideration paid for the advice plus interest at the rate of six percent (6%) per year from the date of payment;
(ii) Damages caused by the fraudulent or deceitful conduct less the amount of any income received as a result of the fraudulent or deceitful conduct;
(iii) Costs; and
(iv) Reasonable attorney's fees.

(2) Subdivision (c)(1) of this section does not apply to a broker-dealer or its agents if:
(A) The investment advice provided is solely incidental to transacting business as a broker-dealer; and
(B) Special compensation is not paid for the investment advice.

(d)
(1) A secondary offender has joint and several liability with a right of contribution for the actions of a primary offender unless the secondary offender satisfies the burden of proving that the secondary offender did not know, and in the exercise of reasonable care could not have known, of the existence of the actions of the primary offender that give rise to liability under this section.
(2) As used in subdivision (d)(1) of this section:
(A) “Primary offender” means a person that is liable under subsection (a), subsection (b), or subsection (c) of this section; and
(B) “Secondary offender” means:
(i) A person that controls a primary offender;
(ii) A partner, officer, or director of a primary offender and any other person occupying a similar status or performing a similar function with respect to the primary offender;
(iii) An employee of a primary offender who materially aids in the actions of a primary offender that give rise to liability under this section; and
(iv) A broker-dealer, agent, investment adviser, or investment adviser representative that materially aids in the actions of a primary offender that give rise to liability under this section.

(e) A tender required by this section may be made at any time before entry of judgment.
(f) Every cause of action under this section survives the death of a person who might have been a plaintiff or defendant.
(g) A person may not sue under this section unless the action is instituted within three (3) years after the violation occurred.
(h) A buyer shall not sue under this section:
(1) If the buyer received a written offer, before suit and at a time when the buyer owned the security, to refund the consideration paid together with interest at six percent (6%) per year from the date of payment less the amount of any income received on the security, and the buyer failed to accept the offer within thirty (30) days of its receipt; or
(2) If the buyer received such an offer before suit and at a time when the buyer did not own the security unless the buyer rejected the offer in writing within thirty (30) days of its receipt.

(i) A person who has made or engaged in the performance of a contract in violation of this chapter or any rule or order of the commissioner, or who has acquired any purported right under the contract with knowledge of the facts by reason of which its making or performance was in violation may not sue on the contract.