Anti-Waiver Provision

Perpetua Vane bought stock from Kettleby Rowe Securities in a sale that violated the Uniform Securities Act. Her lawyer tells her she has a claim under the Act's civil liability section, and separately notes that the same conduct would support a common-law fraud claim in State M, which permits a broader measure of damages. Under the Uniform Securities Act, the existence of the statutory remedy:

1. A.bars the common-law claim, because a detailed statutory remedy is the exclusive route for a securities purchaserThe Act contains no exclusivity clause. It says the opposite: its remedies are in addition to any others existing at law or in equity.
2. B.does not displace the common-law claim, because the rights and remedies under the Act are in addition to any others that exist at law or in equityCorrect. The Act's cumulative-remedies provision preserves every other right the investor has; the statutory action supplements common-law fraud, contract and agency claims.
3. C.suspends the common-law claim until the statutory action has been finally decidedNo such stay exists in the Act. Nothing sequences the two theories.
4. D.requires her to elect between the statutory and the common-law claim before filing suitThe Act imposes no election of remedies. The bar on double recovery operates at judgment, not at filing, and it does not force her to abandon a theory in advance.

Why: The Uniform Securities Act states that the rights and remedies it creates are IN ADDITION TO any other rights or remedies that may exist at law or in equity. The statute supplements the common law; it does not replace it. Vane may plead the statutory claim and a common-law fraud claim arising from the same sale. The Act imposes no election of remedies at the pleading stage and does not stay one claim pending the other. What she cannot do is collect twice for the same loss, but that is an ordinary rule against double recovery, not a limit the Act imposes on which theories she may advance.

Before selling shares of a private offering, Quillon Reeve Securities has each purchaser sign a paragraph reading: the purchaser waives any and all rights and remedies under the state securities act and agrees that the firm shall have no liability under that act. A purchaser later sues over an unregistered non-exempt sale, and the firm points to the signed paragraph. Under the Uniform Securities Act, the paragraph is:

1. A.enforceable only as to registration violations, since fraud claims can never be waivedThe anti-waiver provision is not limited to fraud claims. It voids waivers of compliance with the Act generally.
2. B.enforceable, because a purchaser is free to contract away statutory rights she understands and signs forThe Act removes that freedom for waivers of its own protections.
3. C.void, because the Act renders any provision binding a purchaser to waive compliance with the Act unenforceableCorrect. The anti-waiver provision voids the paragraph and the purchaser keeps her remedies.
4. D.void only if the purchaser can show she did not read or understand the paragraphThe provision is void regardless of what the purchaser read or understood.

Why: The Act voids any condition, stipulation or provision binding a person acquiring a security to waive compliance with the Act or with any rule or order under it. Investor protections would mean little if a seller could route around them with boilerplate at the point of sale, so the waiver is treated as having no effect and the purchaser retains every remedy the Act supplies.

Before opening an account, Corvidae Securities asks each new customer to sign a document stating that the customer waives any right to pursue a claim under the state securities act and agrees that the firm shall not be liable for violations of the Administrator rules. A customer signs it and later suffers a loss from a violation. What is the effect of the signed document?

1. A.The document is void, because the Act makes any provision binding a person to waive compliance with the Act or a rule or order under it unenforceable, so the customer retains all of his remedies.Correct. The anti-waiver provision voids such stipulations outright, and the customer keeps every statutory remedy.
2. B.The document is enforceable, because a customer who has been clearly informed may contract out of statutory protections.Incorrect. Clarity and informed consent are irrelevant; the Act voids the waiver regardless of how it was presented or agreed.
3. C.The document is enforceable as to the Administrator rules but void as to the statute itself, since only statutory rights are protected.Incorrect. The anti-waiver provision covers waivers of the Act and of any rule or order made under it alike.
4. D.The document is valid if the customer is an accredited investor, because sophistication removes the need for statutory protection.Incorrect. The anti-waiver provision draws no distinction based on the wealth or sophistication of the customer.

Why: The Uniform Securities Act contains an express anti-waiver provision. Any condition, stipulation or provision binding a person who acquires a security or receives investment advice to waive compliance with the Act, or with any rule or order under it, is VOID. The document is therefore ineffective and the customer retains every remedy the Act provides, exactly as if he had signed nothing. The reasoning is structural rather than technical. The Act exists to protect the investing public, and rights conferred for a public protective purpose cannot be bargained away by the very people they protect, because a firm with superior bargaining power would otherwise make the waiver a routine condition of doing business and the statute would be nullified in practice. Requesting the waiver is itself problematic: attempting to induce a customer to sign away statutory protections is conduct an Administrator can act on independently, whether or not any separate violation ever occurs.

Ravensbourne Optics has an effective State G registration for its common stock. Its subscription agreement contains a clause stating that by signing, the purchaser waives any right to sue the issuer under the State G securities act and agrees that the Administrator's remedies shall not apply. Under the Uniform Securities Act, that clause is:

1. A.Void, and its inclusion automatically revokes the issuer's effective registration.Incorrect. The clause is void, but no automatic revocation of the registration follows.
2. B.Void, because any provision binding a purchaser to waive compliance with the Act is void.Correct. The anti-waiver provision voids such clauses outright.
3. C.Enforceable as to private lawsuits but not as to the Administrator's remedies.Incorrect. The provision voids the waiver in full, including as to private rights.
4. D.Enforceable, because the purchaser signed the agreement voluntarily after full disclosure.Incorrect. Consent does not validate a waiver of compliance with the Act.

Why: Any condition, stipulation or provision binding a purchaser of a security to waive compliance with the Act or with a rule or order under it is void. The clause is unenforceable, and its presence does not affect the validity of the registration, though it may draw the Administrator's attention to the offering.