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AMI 2704 Issues—Imputed Liability—Securities Fraud

Arkansas Supreme Court Committee On Jury Instructions-Civil

Ark. Model Jury Instr., Civil AMI 2704

Arkansas Model Jury Instructions-Civil

December 2023 Update

Arkansas Supreme Court Committee On Jury Instructions-Civil

Chapter 27. Securities Fraud

AMI 2704 Issues—Imputed Liability—Securities Fraud

[Plaintiff][also] seeks damages from [defendant] because of [his][her][its] role in the transaction, and,

First, must prove all the essential propositions necessary for a verdict against [[seller]] [[purchaser]];

And second, must prove that [defendant][(controlled) (was a partner, officer, or director of) (occupied the status or performed the function of partner, officer, or director of) the (seller) (purchaser) in the transaction(s) at issue][(was an employee who materially aided in the transaction) (was a broker-dealer or agent who materially aided in the transaction) at issue].

[A person “materially aided” in a transaction when [his][her][its] act(s)[is][are] a substantial factor in the transaction. [His][Her][Its] act(s) did not have to be the paramount or decisive factor, but only important to the completion of the transaction.]

[If you find from the evidence in this case that [plaintiff] has proved each of the propositions essential to [his][her][its] claim, then your verdict should be for [plaintiff].]

NOTE ON USE

Use AMI 701 with this instruction if the defendant is claimed to be an agent or employee.

Do not use the last bracketed paragraph if the case is submitted on interrogatories.

COMMENT

This instruction is based on Ark. Code Ann. § 23-42-106(c).

The definition of “materially aided” is derived from AMI 402. Arkansas cases on this issue turn on their unique facts and provide no definition to the term. See Hogg v. Jerry, 299 Ark. 283, 773 S.W.2d 84 (1989); Quick v. Woody, 295 Ark. 168, 747 S.W.2d 108 (1988); Titan Oil and Gas, Inc. v. Shipley, 257 Ark. 278, 517 S.W.2d 210 (1974); Bristow v. Mourot, 99 Ark. App. 386, 260 S.W.3d 733 (2007). See also Benton v. Merrill Lynch & Co., 524 F.3d 866 (8th Cir. 2008) (determining that “materially aided” depends on a fact-based inquiry). The formulation is consistent with authority in other jurisdictions with substantially identical statutory language. See Prince v. Brydon, 764 P.2d 1370 (Or. 1988).

In First Arkansas Bank & Trust v. Gill Elrod Ragon Owen & Sherman, P.A., bond counsel acting strictly in the role of bond counsel was not liable as a seller, control person, or agent with respect to the sale of securities. 2013 Ark. 159, at 6–8.

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