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Copyright (c) 2009 Arizona State Law Journal
Arizona State Law Journal

Article: The Importance of Statutory Text: From Scienter to Nonstatutory Defenses under Arizona Securities Law

Spring, 2009


41 Ariz. St. L.J. 49


Richard G. Himelrick+


Although securities cases are statutory cases, attorneys commonly begin their securities research with a search for cases. We do not begin by reading the statutes. We turn first to Arizona case law, and if that is missing, we usually search for SEC rule 10b-5 1 cases that address the issue. Not often does anyone begin Arizona securities research with an analysis of the statutory text and the principles of interpretation that guide courts in construing statutes. This is a mistake. 2

It is a mistake for at least two reasons. First, unlike actions under rule 10b-5, liability under Arizona's securities statutes is express liability. 3 The rule 10b-5 action is an implied right of action. The federal courts have looked to the rules governing common-law fraud to define the 10b-5 action. 4 In contrast, the elements of liability under Arizona's express-liability provisions are defined by the statutes themselves. 5 It is a mistake therefore to use the common law to define what the legislature defined. Besides that, Arizona's securities laws were passed for public protection that the common law did not provide. 6 Using the common law to interpret the securities statutes risks undermining the expanded protection the legislature envisioned.

Second, statutory construction requires careful thought. American courts have no "generally accepted, and consistently applied theory of statutory interpretation." 7 This means we must make choices about what may be competing theories of statutory interpretation. Reasoned analysis will typically require consideration of a mix of interpretative ...
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