General Civil Liability under Washington Securities Act

The seller of a security who misrepresents or fails to disclose a material fact is liable to the investor for the amount paid for the security plus interest at 8% and reasonable attorney fees, less any amount received on the investment. RCW 21.20.430 (1). Rights under these statutes cannot be waived (RCW 21.20.430(5)). Civil liability for misrepresentation and omission is governed by RCW 21.20.430. Section 1 provides:

(1) Any person, who offers or sells a security in violation of any provisions of RCW 21.20.010, 21.20.140 (1) or (2), or 21.20.180 through 21.20.230, is liable to the person buying the security from him or her, who may sue either at law or in equity to recover the consideration paid for the security, together with interest at eight percent per annum from the date of payment, costs, and reasonable attorneys' fees, less the amount of any income received on the security, upon the tender of the security, or for damages if he or she no longer owns the security. Damages are the amount that would be recoverable upon a tender less (a) the value of the security when the buyer disposed of it and (b) interest at eight percent per annum from the date of disposition.

RCW 21.20.010 provides:

Unlawful offers, sales, purchases. It is unlawful for any person, in connection with the offer, sale or purchase of any security, directly or indirectly:
     (1) To employ any device, scheme, or artifice to defraud;
     (2) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading; or
     (3) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.

RCW 21.20.140 provides:

Unlawful to offer or sell unregistered securities -- Exceptions. It is unlawful for any person to offer or sell any security in this state unless: (1) The security is registered by coordination or qualification under this chapter; (2) the security or transaction is exempted under RCW 21.20.310 or 21.20.320; or (3) the security is a federal covered security, and, if required, the filing is made and a fee is paid in accordance with RCW 21.20.327.

 Defendants have sold unregistered securities without giving full disclosure of all material facts to Plaintiffs.