Securities-Purchaser of Outstanding Shares of Same Class as Registered Issue Cannot Bring Suit Under Section 11 (a) of Securities Act–Colonial Realty Corp. v. Brunswick Corp.

The court in the principal case conceded that, as a matter of economic reality, the prospectus (which contained the alleged misstatement) affects, because of its wide circulation, the value of the shares outstanding at the time it is distributed, as well as that of the new issue which is the subject of the registration statement. Indeed, financial institutions, market experts, brokers, and dealers digest and analyze the prospectus, and their opinions inevitably affect market values of all outstanding stock. However, in light of the act’s legislative history, its general scheme of regulation, and the language contained in its other provisions, the court was compelled to deny the plaintiff’s cause of action.