Hertzberg v. Dignity Partners, Inc.
United States Court of Appeals for the Ninth Circuit
191 F.3d 1076 (1999)
Dignity Partners, Inc. (defendant) purchased AIDS patients' life insurance policies, took over premium payments, and collected proceeds upon the patients' deaths; it raised capital through a single stock offering. Shortly after, a study revealed AIDS patients were living significantly longer, causing Dignity substantial losses from having to pay premiums far longer than expected. Hertzberg (plaintiff), a Dignity stockholder, sued for failing to disclose this risk in its registration statement, but the district court ruled he lacked Section 11 standing because he'd purchased his stock more than 25 days after the offering.
Whether a securities plaintiff has standing under Section 11 to sue over a registration statement's omissions when his stock, though acquired more than 25 days after the offering, can nonetheless be directly traced to that same offering.