Ordinarily an investor is limited to recovery of his or her out-of-pocket losses under the securities laws. However sometimes the courts have held otherwise.

In cases involving unsuitable securities some courts have allowed the difference between the receipts on sale of the unsuitable securities and the amounts the investor would have received had the investor been placed in suitable securities.

In churning cases some courts have allowed the difference between what the investor would have had if the account had been legitimately handled and what the investor in fact had at the time the violation ended.

In any securities fraud case prejudgment interest is also appropriate at the Illinois judgment rate of 9%.

Additionally, at least in disciplinary proceedings, brokers have been found liable for disgorgement of commissions.

Rescission damages, interest and attorneys fees are recoverable under Section 13 of the Illinois Securities Act which states:

A. Every sale of a security made in violation of the provisions of this Act shall be voidable at the election of the purchaser exercised as provided in subsection B of this Section; and the issuer, controlling person, underwriter, dealer or other person by or on behalf of whom said sale was made, and each underwriter, dealer or salesperson who shall have participated or aided in any way in making the sale, and in case the issuer, controlling person, underwriter or dealer is a corporation or unincorporated association or organization, each of its officers and directors (or persons performing similar functions) who shall have participated or aided in making the sale, shall be jointly and severally liable to the purchaser as follows:

(1) for the full amount paid, together with interest from the date of payment for the securities sold at the rate of the interest or dividend stipulated in the securities sold (or if no rate is stipulated, then the rate of 10% per annum) less any income or other amounts received by the purchaser on the securities, upon offer to tender to the seller or tender into court of the securities sold, or where the securities were not received, of any contract made in respect of the sale; or

(2) if the purchaser no longer owns the securities, for the amounts set forth in clause (1) of this subsection A less any amounts received by the purchaser for or on account of the disposition of the securities.

If the purchaser shall prevail in any action brought to enforce any of the remedies provided in this subsection, the court shall assess costs together with the reasonable fees and expenses of the purchaser's attorney against the defendant....

B. Notice of any election provided for in subsection A of this Section shall be given by the purchaser within 6 months after the purchaser shall have knowledge that the sale of the securities to him or her is voidable, to each person from whom recovery will be sought, by registered mail or certified mail, return receipt requested, addressed to the person to be notified at his or her last known address with proper postage affixed, or by personal service. 815 ILCS 5/13

The attorneys fees are mandatory. Attorneys fees are also receivable under the Illinois Consumer Fraud Act.

Punitive damages are not recoverable under the securities laws or for breach of contract.

Punitive damages for breach of fiduciary duty and fraud are recoverable when the breach of fiduciary duty or fraud is willful or malicious. When an act is done maliciously or with reckless and wanton disregard for the rights of the victim punitive damages are recoverable for fraud under the Illinois Consumer Fraud and Deceptive Practices Act.

Donald M. Thompson * 55 W. Monroe #3950; Chicago, IL 60603
Ph: 312-782-0844 * Fax: 312-201-1436 * Email: donthompsonlaw@sbcglobal.net