Texas
How Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A. applies in Texas: state-specific rules, key cases, and bar exam notes for Securities Law.
Texas law mirrors federal securities law principles, particularly in the context of private securities litigation. Texas recognizes that a contributor to a fraud may be held liable, reinforcing the need for due diligence by participants in securities transactions.
In Texas, liability for aiding and abetting a securities violation requires the plaintiff to demonstrate that the defendant knowingly participated in the fraudulent activity, aligned with the standards established in Central Bank.
The court held that liability cannot be imposed for aiding and abetting without evidence of intent or knowledge of wrongful conduct.
This case reinforced that Texas courts require clear proof of the defendant's culpability in assisting unlawful securities sales to impose liability.
The Fifth Circuit applied Central Bank principles, emphasizing the need for a direct connection between alleged conduct and securities fraud.
Texas law closely aligns with federal standards regarding the necessity of proving knowledge in aiding and abetting claims. Unlike some jurisdictions, Texas does not impose a broader standard of liability than the one established at the federal level in Central Bank.
Candidates should understand the implications of Central Bank regarding aiding and abetting liability as it relates to Texas securities law, as this topic may appear on the bar exam.