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GUSTAFSON v. ALLOYD CO.

No. 93-404.

513 U.S. 561 (1995)

GUSTAFSON et al. v. ALLOYD CO., INC., fka ALLOYD HOLDINGS, INC., et al.

United States Supreme Court.

Decided February 28, 1995.

Attorney(s) appearing for the Case

Donald W. Jenkins argued the cause for petitioners. With him on the briefs were Harold C. Wheeler, Debra A. Winiarski, Thomas P. Desmond, and Jennifer R. Evans.

Robert J. Kopecky argued the cause for respondents. With him on the brief were Brian D. Sieve, Kenneth W. Starr, and Paul T. Cappuccio.

Michael R. Dreeben argued the cause for the Securities and Exchange Commission as amicus curiae urging affirmance. With him on the brief were Solicitor General Days, Deputy Solicitor General Kneedler, Simon M. Lorne, Paul Gonson, Jacob H. Stillman, Brian D. Bellardo, and Mark Pennington.*

Kennedy, J., delivered the opinion of the Court, in which Rehnquist, C. J., and Stevens, O'Connor, and Souter, JJ., joined. Thomas, J., filed a dissenting opinion, in which Scalia, Ginsburg, and Breyer, JJ., joined, p. 584. Ginsburg, J., filed a dissenting opinion, in which Breyer, J., joined, p. 596.

Justice Kennedy, delivered the opinion of the Court.

Under § 12(2) of the Securities Act of 1933 buyers have an express cause of action for rescission against sellers who make material misstatements or omissions "by means of a prospectus." The question presented is whether this right of rescission extends to a private, secondary transaction, on the theory that recitations in the purchase agreement are part of a "prospectus."

I

Petitioners Gustafson...

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