Casey and Daniels: How Oregon law makes businesses more susceptible to legal action

"Indeed, unless the Oregon legislature changes the law to be more in line with the vast majority of other states’ securities laws, you frankly should expect to be sued if you provide professional services to clients who sell securities in Oregon."

—John Casey and Brad Daniels in PBJ.

Attorneys John Casey and Brad Daniels authored an article for the Portland Business Journal titled “How Oregon law makes businesses more susceptible to legal action.” The authors discuss how, under the Oregon Securities Law, providers of professional services — banking, accounting, legal advice, etc. — may be held liable by their client’s investors if their client commits a securities violation, even if the professional does not know the investors and was not a party to the client’s violation.

Oregon is one of only a handful of states where outside advisers face liability in this manner. The authors explain that although the law offers an affirmative defense for advisers—that the adviser did not know or could not have reasonably known of its client’s wrongdoing—it places the burden on the adviser to make this showing.  Proving this in court can be time-consuming and expensive.

Finally, the authors offer a list of considerations for the adviser to protect itself in its relationship with its client, some of which include: know the potentially applicable law; investigate the client, its business and its securities sales; know the client’s other professional advisers; and purchase professional liability insurance.

Read “How Oregon law makes businesses more susceptible to legal action,” published June 5, 2017. (Subscription required.)