Dispute involving Defendants' alleged inducement of Plaintiffs to make total investment of $4.61 million in start-up company, based on allegedly false statements and misrepresentations. Section 12(H) of Illinois Securities Law is based on Section 12 of Federal Securities Act. Proof of reliance is not required to prevail on a Section 12(H) claim under Illinois Securities Law; main issues are whether a false statement exists and whether it was material. Section 12(H) of Illinois Securities Law does not apply to limited or private security offerings and only applies to public offerings, which are required to be registered. As securities here were offered as part of limited or private offering, Section 12(H) does not apply. Court properly found that Plaintiffs could not reasonably rely on executive summary, PowerPoint, and e-mails due to cautionary language attached.(McBRIDE and HOWSE, concurring.)
Illinois Appellate Court
Civil Court
Illinois Securities Law