Third Circuit Clarifies Board Observers Are Not Subject to Section 11 Liability

It is common for investors in venture capital and private equity transactions, and in other ‎investment arrangements, as a condition to their investment, to have rights to appoint board ‎observers when director representation is not available. An unanswered question has been the ‎extent to which a board observer has liability exposure under Section 11 of the Securities Act of ‎‎1933, for example, when a company goes public.‎

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