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AMI 2706 Measure of Damages—Securities Fraud

Arkansas Supreme Court Committee On Jury Instructions-Civil

Ark. Model Jury Instr., Civil AMI 2706
Arkansas Model Jury Instructions-Civil
November 2021 Update
Arkansas Supreme Court Committee On Jury Instructions-Civil
Chapter 27. Securities Fraud
AMI 2706 Measure of Damages—Securities Fraud
[If you decide for [plaintiff] on the question of liability (against any party [he][she][it] is suing),] [If an interrogatory requires you to assess the damages of [plaintiff],] you must then fix the amount of money [he][she][it] may recover according to the following formula:
A. The total amount paid for the security, 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 less the value of the security when [plaintiff] disposed of it].
B. The value of the security sold [plus any income or other distributions in cash or the value of such income or distribution if made in a form other than cash], together with interest at six percent (6%) per year from the date of transfer [less the amount received when the security was sold].
NOTE ON USE
This instruction should be used only if there is a factual dispute concerning the calculation of damages.
Paragraph A should be used when a purchaser is the plaintiff. Use the second bracketed language only if plaintiff no longer owns the security.
Paragraph B should be used when a seller is the plaintiff.
COMMENT
This instruction is based on Ark. Code Ann. § 23-42-106(a)(1) and (b)(1). Damages may be for out-of-pocket losses or for the benefit of the bargain. See AMI 2442. That portion of the Arkansas statute that provides that a buyer of an unregistered security can recover from the seller the consideration paid for the security, together with interest at six percent, costs, and reasonable attorney fees, less the amount of income received on the security, upon tender of the security, sets forth a calculation of damages designed to restore the plaintiff to the position he held before he entered into the wrongful transaction. Peacock v. 21st Century Wireless Group, Inc., 285 F.3d 1079 (8th Cir. 2002). See also Rooney v. Williamson, 167 F.3d 1185 (8th Cir. 1999) (remanding case for a recomputation of interest owed to defendant seller after determining that, upon rescission of sale of securities that was unlawful under Arkansas law, offset against plaintiff purchaser's recovery by amount that purchaser received, during his ownership of stock, as credit against loan he took out to buy stock, should have been taken into account in calculating amount of prejudgment interest). A successful plaintiff may also recover reasonable attorney fees in addition to “costs.” See Peacock, 285 F.3d at 1086 (determining that the trial court did not abuse its discretion by awarding only 15% of attorney fees requested by owners of company in a case in which the owners sued a corporation with which they had entered into a stock-swap agreement based on the court's calculation that only 15% of attorneys' time had been spent on successful failure to register claim, while most of the attorneys' time had been spent on the unsuccessful breach of contract and fraud claims).
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