The Securities Act of 1933 was designed to provide investors with full disclosure of material information concerning public offerings of securities in commerce, to protect investors against fraud and, through the imposition of specified civil liabilities, to promote ethical standards of honesty and fair dealing. The Act provides that any signer, director of the issuer, preparing or certifying accountant, or underwriter may be liable if any part of the registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

Any person acquiring a security issued pursuant to a materially false registration statement has a cause of action under the Securities Act of 1933 unless the purchaser knew about the false statement at the time of acquisition.