Article 5. VIOLATIONS, PENALTIES, AND CIVIL LIABILITY  

LAW REVIEWS. --For article examining interface between law and business in regards to marketing of thrift notes, see 26 Mercer L. Rev. 311 (1974). For article, uniformity under the securities laws: regulation D and the new Georgia uniform limited offering exemption, see 19 Ga. St. B.J. 74 (1982). For article, "Statutes of Limitation: Counterproductive Complexities," see 37 Mercer L. Rev. 1 (1985). For annual survey of administrative law, see 38 Mercer L. Rev. 17 (1986). For article, "The Civil Jurisdiction of State and Magistrate Courts," see 24 Ga. St. B.J. 29 (1987). For article, "Start Making Sense: An Analysis and Proposal for Insider Trading Regulation," see 26 Ga. L. Rev. 179 (1992). For article, "Common Fact Patterns of Stock Broker Fraud and Misconduct," see 7 Ga. St. B.J. 14 (2002). For article, "Theories of Stockbroker and Brokerage Firm Liability," see 9 Ga. St. B.J. 12 (2004). For annual survey of law of business associations, see 56 Mercer L. Rev. 77 (2004). For article, "Georgia Securities Act -- Let the Buyer Beware," see 10 Ga. St. B.J. 14 (2005). For survey of 11th Circuit securities regulation cases, see 56 Mercer L. Rev. 1341 (2005). For annual survey of cases discussing business associations, see 57 Mercer L. Rev. 49 (2005). For article, "The Georgia Uniform Securities Act of 2008: An Analysis of Significant Changes to Georgia's Blue Sky Law," see 14 (No. 6) Ga. St. B.J. 18 (2009).
   For comment, the purchase of all the shares of stock of a business is not the purchase of a "Security" within the meaning of the Federal Securities Act of 1933 or the Georgia Securities Act of 1973, see 30 Emory L.J. 1212 (1981).
 
JUDICIAL DECISIONS
 
EDITOR'S NOTES. --In light of the similarity of the statutory provisions, decisions under former Ga. L. 1957, p. 134, former Code 1933, §§ 97-112, 97-113, 97-114, and former O.C.G.A. §§ 10-5-12, 10-5-13, and 10-5-14, as amended, which were subsequently repealed but were succeeded by provisions in this article, are included in the annotations for this article.
 
SECTION RESEMBLES FEDERAL REGULATION. --Although the defenses available may differ between this section and federal Rule 10(b)-5, the resemblance goes beyond each requiring an element of culpability, as this section bears a close resemblance to Rule 10(b)-5 and shares a commonality of purpose with that rule. Osterneck v. E.T. Barwick Indus., Inc., 79 F.R.D. 47 (N.D. Ga. 1978) (decided under former Ga. L. 1957, p. 134, as amended).
   As there was no dispute that agreements and notes defendant provided the victims in exchange for money were investments and that the victims relied on defendant to manage the investments and to provide a return on the investments, the instruments were "securities" within the meaning of Georgia's blue sky law; that the amount of expected return was fixed was immaterial. Rasch v. State, 260 Ga. App. 379, 579 S.E.2d 817 (2003) (decided under former O.C.G.A. § 10-5-12).
 
STANDING. --Because plaintiff's injuries did not flow directly from the commission of predicate acts by defendant, the plaintiff did not have standing to bring a RICO action. Longino v. Bank of Ellijay, 228 Ga. App. 37, 491 S.E.2d 81 (1997) (decided under former O.C.G.A. § 10-5-12).
 
STATE LIMITATION PERIOD APPLIES IN FEDERAL ACTION FOR SECURITIES FRAUD. --A two-year statute of limitations was applicable to an action alleging violations of 15 U.S.C. §§ 78j(b) and 78g, 17 C.F.R. 240.10b-5, and the common law of Georgia, in that plaintiffs were induced to trade their stock in a corporation for stock in another by misrepresentations in the latter's financial statements. Osterneck v. E.T. Barwick Indus., Inc., 79 F.R.D. 47 (N.D. Ga. 1978) (decided under former Ga. L. 1957, p. 134, as amended).
   Georgia Blue Sky Law are most analogous to § 10(b) of the federal Securities Exchange Act, and federal Rule 10b-5, and thus the two-year statute of limitations applies to § 10(b) and Rule 10b-5 claims. Friedlander v. Troutman, Sanders, Lockerman & Ashmore, 788 F.2d 1500 (11th Cir. 1986) (decided under former O.C.G.A. §§ 10-5-12 and 10-5-14).
 
LIMITATION PERIOD FOR FEDERAL ACTION BY DEFRAUDED SELLER. --Since under the securities law defrauded sellers have no remedy, the applicable statute of limitations for federal 10b-5 cases brought in Georgia by allegedly defrauded sellers is the four-year limitation associated with Georgia's fraud remedy (see O.C.G.A. §§ 9-3-31, 51-6-1 et seq.) and not the two-year period found in the securities law. Kirk v. First Nat'l Bank, 439 F. Supp. 1141 (M.D. Ga. 1977) (decided under former Ga. L. 1957, p. 134, as amended).
 
LIMITATION PERIOD FOR ACTION AGAINST BROKER FOR CHURNING, MARGIN VIOLATIONS. --The four-year period of limitations applicable to actions under Georgia's general fraud statute (see O.C.G.A. §§ 9-3-31, 51-6-1 et seq.), and not the two-year limitation applicable to actions brought under former Code 1933, § 97-114, was applicable to causes of action alleged under both 15 U.S.C. § 78j(b) and 15 U.S.C. § 78g. McNeal v. Paine, Webber, Jackson & Curtis, Inc., 598 F.2d 888 (5th Cir. 1979) (Action not against principal in securities transaction for rescission; decided under former Ga. L. 1957, p. 134, as amended).
 
STATE LIMITATION PERIOD APPLIED AS EXISTED WHEN ACTION ACCRUED. --In a federal security case, the state statute of limitations was looked to as it existed when the cause of action accrued, for example, when the alleged churning by a broker took place. McNeal v. Paine, Webber, Jackson & Curtis, Inc., 598 F.2d 888 (5th Cir. 1979) (decided under former Ga. L. 1957, p. 134, as amended).
 
STATE NEED ONLY PROVE DATE WITHIN PERIOD OF LIMITATIONS. --Defendant's conviction for misstating a material fact to a victim in connection with the sale of a security for an indictment dated December 22, 2004, was properly proven by the state to have occurred within the four year statute of limitations period by the state establishing that the victim invested in the stock by two checks, dated November 28 and December 13, 2001, and the victim testified that the investment was made based on conversations with defendant during the months of October and November of 2001; as a result, the evidence was sufficient to show that defendant's violative acts as to the sale of securities occurred within the period provided by the statute of limitations. Haupt v. State, 290 Ga. App. 616, 660 S.E.2d 383 (2008) (decided under former O.C.G.A. § 10-5-12).
 
SHARES OF STOCK ARE "SECURITIES" which it is unlawful to sell in violation of subsection (a) of former Code 1933, § 97-103 and former Code 1933, § 97-112. DeBoard v. Schulhofer, 156 Ga. App. 158, 273 S.E.2d 907 (1980) (decided under former Code 1933, § 97-112).
   Demand promissory note and option to purchase shares of corporation given in exchange for checks for $12,500,000 was a transaction to which requirements of subsection (a) of former Code 1933, § 97-112 and former Code 1933, § 97-103 applied. DeBoard v. Schulhofer, 156 Ga. App. 158, 273 S.E.2d 907 (1980) (decided under former Code 1933, § 97-112).
 
CAUSE OF ACTION IS EXPRESSLY PROVIDED BY FORMER O.C.G.A. § 10-5-14(A) in favor of purchasers for the violation of paragraph (a)(2) of former O.C.G.A. § 10-5-12. Diamond v. Lamotte, 709 F.2d 1419 (11th Cir. 1983) (decided under former O.C.G.A. § 10-5-12).
 
INTENT NOT ELEMENT OF CRIME UNDER SUBSECTION (B). --Under counts charging the defendants with representations to the effect that the securities commissioner had passed upon the merits of the stock, an intent to deceive is not an essential element of the crime charged; the criminal act is complete upon the making of the representation. Curtis v. State, 102 Ga. App. 790, 118 S.E.2d 264 (1960) (decided under former Ga. L. 1957, p. 134).
 
SCIENTER IS ELEMENT UNDER SUBSECTION (A). --Trial court did not err in charging a jury that scienter was an element of securities fraud under former O.C.G.A. §§ 10-5-12(a)(2) and 10-5-14(a); further, the trial court properly charged the jury that justified reliance was an element of securities fraud. Keogler v. Krasnoff, 268 Ga. App. 250, 601 S.E.2d 788 (2004) (decided under former O.C.G.A. § 10-5-12).
 
TWO TYPES OF CRIMES ARE PROHIBITED BY THIS SECTION: (1) the making of an intentional representation that by the filing of a registration statement, the commissioner of securities had passed upon the merits of the security and (2) the use of a device, scheme, or artifice to defraud, or the commission of any act, practice, or course of business which would operate as a fraud on the purchaser. In the former instance the making of the representation completes the criminal act, whereas in the latter instance an intent to defraud has to be shown. Curtis v. State, 102 Ga. App. 790, 118 S.E.2d 264 (1960) (decided under former Ga. L. 1957, p. 134).
 
PHYSICAL PRESENCE UNNECESSARY FOR VENUE OF CONSPIRACY. --If the jury finds defendants conspired to sell stock by means of practices and misrepresentations inhibited by this section, and pursuant to such conspiracy stock was in fact offered and the misrepresentations made in Hall County, the fact that the defendants were not physically present in the county at the time their agents put the scheme into operation does not operate to relieve the agents from being tried and convicted in such county. Curtis v. State, 102 Ga. App. 790, 118 S.E.2d 264 (1960) (decided under former Ga. L. 1957, p. 134).
 
TRANSACTION HELD AS NOT TAKING PLACE IN GEORGIA. --Where a plaintiff, a Georgia resident, and a defendant, a Tennessee resident, discussed by telephone an arrangement whereby the defendant's company would serve as plaintiff's investment advisor in trading of commodity futures, and the defendant mailed to the plaintiff two letter agreements setting out the contract terms, and the plaintiff signed the letters and returned the letters for signature of the other party, under Georgia law the transaction did not take place in Georgia. Rasmussen v. Thomson & McKinnon Auchincloss Kohlmeyer, Inc., 608 F.2d 175 (5th Cir. 1979) (decided under former Code 1933, § 97-112).
 
TRANSACTION HELD AS TAKING PLACE IN GEORGIA. --With regard to defendant's convictions on two counts of making an untrue material statement of fact and omitting other material facts in selling stock, the state unequivocally proved venue in Chatham County, Georgia, by establishing, via a victim's testimony, that the offense occurred within the Chatham County area and the evidence otherwise showed that the victim executed a relevant stock purchase agreement that included the language in the "State of Georgia, County of Chatham." Haupt v. State, 290 Ga. App. 616, 660 S.E.2d 383 (2008) (decided under former O.C.G.A. § 10-5-12).
 
BURDEN ON CONTROLLING OFFICER SEEKING TO ESCAPE LIABILITY UNDER SUBSECTION (A). --Former Code 1933, § 97-114 imposed liability upon controlling officer of corporation for transaction executed by corporate treasurer administering affairs in the officer's absence, which transaction violated subsection (a) of former Code 1933, § 97-112 and former Code 1933, § 97-103, if the officer directly or indirectly controlled treasurer, unless the officer sustained burden of proof that the officer did not know, and in exercise of reasonable care could not have known, of existence of facts by reason of which liability was alleged to exist. DeBoard v. Schulhofer, 156 Ga. App. 158, 273 S.E.2d 907 (1980) (decided under former Code 1933, § 97-112).
 
TO HOLD AN INDIVIDUAL TO BE AN AGENT who has participated or aided in making sales of securities, the court must find that the individual was so entangled in the actual sale of securities that the individual's activities were at least a substantial factor in the purchaser's decision to buy the security and that the individual's activities were either authorized or ratified by the issuer. In re N. Am. Acceptance Corp. Sec. Cases, 513 F. Supp. 608 (N.D. Ga. 1981) (decided under former O.C.G.A. § 10-5-12).
 
CIVIL LIABILITY FOR PRE-1974 VIOLATIONS OF ANTI-FRAUD PROVISIONS. --While Ga. L. 1973, p. 1202 now provides for express civil liability for anyone who violates its general anti-fraud provisions, former Code 1933, §§ 97-104, 97-112, 97-114, which apply to transactions occurring before April 1, 1974, provide for civil liability only as provided for in former Code 1933, § 97-114. In re N. Am. Acceptance Corp. Sec. Cases, 513 F. Supp. 608 (N.D. Ga. 1981) (decided under former O.C.G.A. § 10-5-12).
 
PROSECUTION DID NOT ABATE due to the 1986 repeal and reenactment of former O.C.G.A. § 10-5-12, where the conduct with which defendant was charged and convicted was not decriminalized at any time during the various redefinitions of the statute. Greenhill v. State, 199 Ga. App. 218, 404 S.E.2d 577, cert. denied, 199 Ga. App. 906, 404 S.E.2d 557 (1991) (decided under former O.C.G.A. § 10-5-12).
 
FEDERAL EQUITABLE TOLLING PRINCIPLES INAPPLICABLE. --As a claim under former O.C.G.A. § 10-5-12 could not be characterized as a federally created remedy, federal equitable tolling principles did not apply, and such a claim, brought over two years after the purchase of stock, was time-barred by former O.C.G.A. § 10-5-14. Wilkinson v. Paine, Webber, Jackson & Curtis, Inc., 585 F. Supp. 23 (N.D. Ga. 1983) (decided under former O.C.G.A. § 10-5-12).
 
COMPLAINT NOT SHOWING INTENT TO DEFRAUD DISMISSED. --A motion to dismiss a complaint alleging violations of the Georgia Securities Act, the Uniform Limited Partnership Act, and common-law fraud was granted on the ground that the complaint did not show an intent to defraud. Currie v. Cayman Resources Corp., 595 F. Supp. 1364 (N.D. Ga. 1984), aff'd in part, rev'd in part on other grounds, 835 F.2d 780 (11th Cir. 1988) (decided under former O.C.G.A. § 10-5-12).
 
EVIDENCE OF FRAUD POSSIBLY SUFFICIENT. --Trial court erred in granting the defendant broker's motion to dismiss plaintiff's claim of securities fraud for failure to state a claim upon which relief can be granted because a statement of the broker made in connection with the sale of stock was possibly sufficient to warrant a grant of the relief sought. GCA Strategic Inv. Fund, Ltd. v. Joseph Charles & Assocs., 245 Ga. App. 460, 537 S.E.2d 677 (2000) (decided under former O.C.G.A. § 10-5-12).
 
NO CLAIM WHERE PROFITS DEPENDENT ON PURCHASER'S EFFORTS. --Where the return to be expected from the purchase of securities depended in part upon the purchaser's own efforts and not solely from the efforts of others, the purchaser has no claim under subsections (a)(2) or (d)(1) of former O.C.G.A. § 10-5-12. Nicholson v. Harris, 179 Ga. App. 35, 345 S.E.2d 63 (1986) (decided under former O.C.G.A. § 10-5-12).
 
THEFT BY TAKING DID NOT MERGE WITH SECURITIES VIOLATION. --Defendant's convictions for theft by taking under O.C.G.A. § 16-8-2 and for violating the Georgia Securities Act of 1973, former O.C.G.A. § 10-5-12 et seq., did not merge for sentencing purposes because the language of the statutes indicated that the offenses were separate offenses as a matter of law and because while theft required that the victim sustain a loss, a securities violation did not. Branan v. State, 285 Ga. App. 717, 647 S.E.2d 606 (2007) (decided under former O.C.G.A. § 10-5-12).
 
REQUESTED JURY INSTRUCTION PROPERLY REFUSED. --Trial court did not err by failing to charge the jury that the reckless representation of facts as true without knowledge was actionable as a species of fraud without scienter; the proposed charge was an incorrect statement of law because it obviated the necessity to prove that the party making the alleged reckless misrepresentation intended to deceive the party relying thereon and the proposed charge was not precisely tailored or adjusted to the evidence. Keogler v. Krasnoff, 268 Ga. App. 250, 601 S.E.2d 788 (2004) (decided under former O.C.G.A. § 10-5-12).
 
COURT HAD NO DUTY TO CHARGE JURY ON DEFINITION OF "SECURITY." --Trial court did not err, with regard to defendant's convictions on two counts of making an untrue material statement of fact and omitting other material facts in selling stock, by failing to sua sponte charge the jury on the statutory definition of the word "security" and other specifics as the record showed that the trial court properly charged the jury that the term security meant any stock or share or any other instrument commonly known as a security, which was in consonance with the evidence and the Georgia Securities Act of 1973, former O.C.G.A. § 10-5-12(a)(1) and (2)(B); further, since defendant made no request to charge, the trial court had no sua sponte duty to give a charge. Haupt v. State, 290 Ga. App. 616, 660 S.E.2d 383 (2008) (decided under former O.C.G.A. § 10-5-12).
 
SCIENTER CONTEMPLATES INTENT TO DECEIVE. --Scienter, for purposes of former O.C.G.A. § 10-5-12(a)(2), even if based on a reckless misrepresentation, contemplates the intent to deceive. Keogler v. Krasnoff, 268 Ga. App. 250, 601 S.E.2d 788 (2004) (decided under former O.C.G.A. § 10-5-12).
 
UNDER THIS SECTION IT IS NOT ESSENTIAL THAT CRIMINAL PROCEEDINGS BE INSTITUTED, but the commissioner has the right to issue an order to prohibit sales people from continuing the sale of questionable securities and also to apply for an injunction to restrain such acts and, further, to turn over any evidence to the district attorney, who may institute the necessary criminal proceedings. Cohen v. State, 101 Ga. App. 23, 112 S.E.2d 672 (1960) (decided under former Ga. L. 1957, p. 134).
 
PROVISIONS FOR INITIATING CRIMINAL PROCEEDINGS NOT EXCLUSIVE. --This section is permissive in character and provides for a manner of initiating criminal proceedings through the commissioner and Attorney General, but the statute is by no means intended to be exclusive, and the fact that the district attorney rather than the Attorney General appears before the grand jury, or that warrants are sworn out in the first instance and prior to the grand jury proceedings by affidavit of the individual prosecutors, in no way renders the indictment illegal. Curtis v. State, 99 Ga. App. 732, 109 S.E.2d 868 (1959) (decided under former Ga. L. 1957, p. 134).
 
"WILLFULLY." --Court of Appeals of Georgia, First Division, concludes that the term "willfully" in former O.C.G.A. § 10-5-13(a)(1)(A)(iv) has the same meaning that it has been construed to have in former O.C.G.A. § 10-5-24. Before any of the civil penalties of up to $50,000 for single violations and up to $500,000 for multiple violations can be imposed under former O.C.G.A. § 10-5-13(a)(1)(A)(iv), there must be a knowing and intentional violation of the Georgia Securities Act of 1973, former O.C.G.A. § 10-5-1 et seq. Garvin v. Sec'y of State, 266 Ga. App. 66, 596 S.E.2d 166 (2004) (decided under former O.C.G.A. § 10-5-13).
 
CIVIL FINES AND CEASE AND DESIST ORDER. --Seller of investment contracts, whereby the seller sold an investment venture of payphones to a purchaser, who then leased back the phones for an expected fixed monthly return, was not properly sanctioned with a fine by the Commissioner of Securities pursuant to former O.C.G.A. § 10-5-13(a)(1)(A)(iv) since it was found that the seller had acted willfully, but there was no showing that the seller had acted in knowing and intentional violation of the Georgia Securities Act of 1973, former O.C.G.A. § 10-5-1 et seq.; the Commissioner's issuance of a cease and desist order which was not limited solely to the willful acts of the seller was proper under former O.C.G.A. § 10-5-13(a)(1). Garvin v. Sec'y of State, 266 Ga. App. 66, 596 S.E.2d 166 (2004) (decided under former O.C.G.A. § 10-5-13).
 
CONSTRUCTION WITH O.C.G.A. § 13-6-11. --Ancillary award of attorney fees and expenses in favor of a seller was ordered struck, pursuant to O.C.G.A. § 9-12-8, as: (1) the jury failed to find the buyers liable on the seller's underlying substantive claims; (2) the award was based on O.C.G.A. § 13-6-11, not former O.C.G.A. § 10-5-14; and, as a result, (3) the lack of a damages award in favor of the seller did not support the award. Davis v. Johnson, 280 Ga. App. 318, 634 S.E.2d 108 (2006) (decided under former O.C.G.A. § 10-5-14).
 
REMEDY AFFORDED BY SECTION IS NOT SOLE REMEDY which a purchaser of securities is entitled to pursue. Turpin v. Wilson, 133 Ga. App. 239, 211 S.E.2d 316 (1974) (noting subsection (e) of former Code 1933, § 97-114 preserves former Ga. L. 1957, p. 134, § 13(c)).
   Although former O.C.G.A. § 10-5-14 prevented a purchaser of unregistered securities from pursuing civil damages arising from their sale, this statute of limitation did not otherwise prevent the purchaser from arguing that the contract remained unlawful and unenforceable, because the passage of two years did not erase the unlawful nature of the underlying contract, but merely limited the remedies available. Carter v. Moody, 236 Ga. App. 262, 511 S.E.2d 520 (1999) (decided under former O.C.G.A. § 10-5-14).
 
CAUSE OF ACTION IS EXPRESSLY PROVIDED by subsection (a) of former O.C.G.A. § 10-5-14 in favor of purchasers for the violation of former O.C.G.A. § 10-5-12(a)(2). Diamond v. Lamotte, 709 F.2d 1419 (11th Cir. 1983) (considering sales made before April 1, 1974, the effective date of this chapter, but noting two-year limitation appears in both Ga. L. 1957, p. 134, § 13(a), and subsection (c) of former O.C.G.A. § 10-5-14).
 
REMEDY LIMITED TO BUYER. --This section limits the civil remedy to the buyer of a security. Kirk v. First Nat'l Bank, 439 F. Supp. 1141 (M.D. Ga. 1977) (decided under former Ga. L. 1957, p. 134, as amended).
   It is clear that only buyers of security shall have a remedy for fraud. Kirk v. First Nat'l Bank, 439 F. Supp. 1141 (M.D. Ga. 1977) (decided under former Ga. L. 1957, p. 134, as amended).
   Party who was both attorney for the transfer and a transferee of the stock was a purchaser and had standing to sue the sellers under subsection (a) of former O.C.G.A. § 10-5-14. Bell v. Sasser, 238 Ga. App. 843, 520 S.E.2d 287 (1999) (decided under former O.C.G.A. § 10-5-14).
 
RIGHT OF ACTION AGAINST ANY TRANSFEROR. --Legislative intent under the securities Acts has been to give the right of action against the party transferring the title to the unregistered stock, whether the title was transferred by the original issuance of the stock or a transfer of stock already issued. Such an intent provides protection for different transferees who might have paid various prices for the stock. Utzman v. Caribbean & S.E. Dev. Corp., 107 Ga. App. 56, 129 S.E.2d 62 (1962) (decided under Ga. L. 1957, p. 134, as amended).
 
ANY SALE VIOLATING SECURITIES LAW VOIDABLE BY PURCHASER. --This section provides that any sale of securities in violation of the securities law shall be voidable at the election only of the purchaser. Collins v. Norton, 136 Ga. App. 105, 220 S.E.2d 279 (1975) (decided under former Code 1933, § 97-114).
 
NO ACTION FOR VIOLATION OF FORMER O.C.G.A. § 10-5-12(D). --Although the Georgia Securities Act does have a provision tracking the language of Securities and Exchange Rule 10b-5, former O.C.G.A. § 10-5-12(d), no cause of action was expressly provided for its violation. Diamond v. Lamotte, 709 F.2d 1419 (11th Cir. 1983) (decided under former O.C.G.A. §§ 10-5-12 and 10-5-14).
 
RIGHT OF RESCISSION. --A purchaser of securities sold without compliance with the prescribed regulations, who is not in pari delicto with the seller, may, within a specified or reasonable time, rescind the transaction and recover the money or other compensation paid therefore. Nash v. Jones, 224 Ga. 372, 162 S.E.2d 392 (1968) (decided under former Ga. L. 1957, p. 134, as amended).
 
PURPORTED OFFERS OF RESCISSION, stating that "you have the opportunity to rescind your subscription ... by letter notice to us within 72 hours after receipt of this letter," did not meet the specific requirements of paragraph (d)(1) of former O.C.G.A. § 10-5-14 in that they did not (1) offer repayment of consideration; (2) within 30 days from the date of acceptance with (3) accrued interest thereon. Binder v. Gordian Sec., Inc., 742 F. Supp. 663 (N.D. Ga. 1990) (decided under former O.C.G.A. § 10-5-14).
 
ACTION FOR MONEY HAD AND RECEIVED IS SUBSTITUTE FOR SUIT IN EQUITY and, while founded on causes of action arising out of application of equitable principles, is an action at law by reason of its origin as a mode of action in the common-law courts. Turpin v. Wilson, 133 Ga. App. 239, 211 S.E.2d 316 (1974) (decided under former Ga. L. 1957, p. 134, as amended).
 
ACTION LIES WHERE SECURITIES NOT DELIVERED, REFUND REFUSED. --It is not inappropriate for a purchaser to pursue recovery on a theory of assumpsit or money had and received where defendant fails to deliver the securities contracted for and refuses to refund the moneys received from the purchaser. Turpin v. Wilson, 133 Ga. App. 239, 211 S.E.2d 316 (1974) (decided under former Ga. L. 1957, p. 134, as amended).
   Trial court did not err in charging a jury that scienter is an element of securities fraud under former O.C.G.A. §§ 10-5-12(a)(2) and 10-5-14(a); further, the trial court properly charged the jury that justified reliance is an element of securities fraud. Keogler v. Krasnoff, 268 Ga. App. 250, 601 S.E.2d 788 (2004) (decided under former O.C.G.A. § 10-5-14).
 
TENDER OF SECURITY INTO COURT IS SUFFICIENT TENDER, even though no other tender has been made. Rushing v. Williams, 125 Ga. App. 601, 188 S.E.2d 437 (1972) (decided under former Ga. L. 1957, p. 134, as amended).
   Purchaser was not required to tender the original stock certificates where purchaser tendered certificates equal to the number of shares purchased. Bell v. Sasser, 238 Ga. App. 843, 520 S.E.2d 287 (1999) (decided under former O.C.G.A. § 10-5-14).
 
PURCHASER'S ISSUANCE OF ADDITIONAL SHARES OF STOCK to new investors following the sale did not affect purchaser's entitlement to the repurchase remedy. Bell v. Sasser, 238 Ga. App. 843, 520 S.E.2d 287 (1999) (decided under former O.C.G.A. § 10-5-14).
 
ATTORNEY'S FEES. --Purchaser of securities who became director and key employee of corporation had no claim for attorney's fees in an abortive action for violation of the Securities Act. Nicholson v. Harris, 179 Ga. App. 35, 345 S.E.2d 63 (1986) (decided under former O.C.G.A. § 10-5-14).
   Former O.C.G.A. § 10-5-114 did not permit recovery of all attorney fees in a multicount action; only fees attributable to claims under the Georgia Securities Act are recoverable. Huggins v. Chapin, 233 Ga. App. 109, 503 S.E.2d 356 (1998).
 
CITED in Jones v. International Inventors, Inc. E., 429 F. Supp. 119 (N.D. Ga. 1976); D.K. Properties, Inc. v. Osborne, 143 Ga. App. 832, 240 S.E.2d 293 (1977); Security Branding, Inc. v. Corbitt, 144 Ga. App. 164, 240 S.E.2d 728 (1977); Freedman v. United States, 437 F. Supp. 1252 (N.D. Ga. 1977); Hamilton Bank & Trust Co. v. Holliday, 469 F. Supp. 1229 (N.D. Ga. 1979); Hirsch v. Equilateral Assocs., 245 Ga. 373, 264 S.E.2d 885 (1980); Murray v. Shearson Hayden Stone, Inc., 524 F. Supp. 304 (N.D. Ga. 1980); Martin v. T.V. Tempo, Inc., 628 F.2d 887 (5th Cir. 1980); Putnam v. Williams, 652 F.2d 497 (5th Cir. 1981); Jones v. Miles, 656 F.2d 103 (5th Cir. 1981); Cocklereece v. Moran, 532 F. Supp. 519 (N.D. Ga. 1982); Kennedy v. Tallant, 710 F.2d 711 (11th Cir. 1983); Friedlander v. Nims, 571 F. Supp. 1188 (N.D. Ga. 1983); Miller v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 572 F. Supp. 1180 (N.D. Ga. 1983); Mack v. Smith, 178 Ga. App. 652, 344 S.E.2d 474 (1986); Cook v. State, 183 Ga. App. 720, 359 S.E.2d 716 (1987); Pelletier v. Zweifel, 921 F.2d 1465 (11th Cir. 1991); Wells v. HBO & Co., 813 F. Supp. 1561 (N.D. Ga. 1992); Fuller v. Dreischarf, 238 Ga. App. 18, 517 S.E.2d 89 (1999); Garland v. Advance Med. Funding L.P., 86 F. Supp. 2d 1195 (N.D. Ga. 2000); Hafner v. Infocure Corp., 210 F. Supp. 2d 1331 (N.D. Ga. 2002); McCondichie v. Groover, 261 Ga. App. 784, 584 S.E.2d 57 (2003).
 
EDITOR'S NOTES. --Subsection (d) was added to former O.C.G.A. § 10-5-12 by Ga. L. 1975, p. 928, § 24, and amended by Ga. L. 1979, p. 1296, § 8. As amended, it was now similar to the last paragraph of former Ga. L. 1957, p. 134, § 11, which was repealed by Ga. L. 1973, p. 1202, § 26. Most of the cases cited below were decided under the 1957 Act, as indicated.
 
WHAT CONSTITUTES "SECURITIES." --For purposes of a criminal conviction under the Georgia Securities Act of 1973, former O.C.G.A. § 10-5-12 et seq., a scheme whereby the defendant convinced the victims to invest in boat docks, slips, or storage docks with a return on the victims' investment in a year involved "securities" because there was an investment and a reasonable expectation of profits and the victims relied on the defendant to bring about the profits. Branan v. State, 285 Ga. App. 717, 647 S.E.2d 606 (2007) (decided under former O.C.G.A. § 10-5-12).
 
ONLY BUYERS HAVE REMEDY. --This section and § 10-5-14 make it clear that only buyers of security shall have a remedy for fraud. Kirk v. First Nat'l Bank, 439 F. Supp. 1141 (M.D. Ga. 1977) (decided under former Code 1933, § 97-112).
 
SECTION INHIBITS USE OF SCHEME WITH INTENT TO DEFRAUD. --Under this section, the existence of the scheme, device, or artifice, and its use with an intent to defraud, regardless of outcome, constitutes the inhibited act. Curtis v. State, 99 Ga. App. 732, 109 S.E.2d 868 (1959) (decided under former Ga. L. 1957, p. 134); Curtis v. State, 102 Ga. App. 790, 118 S.E.2d 264 (1960) (decided under former Ga. L. 1957, p. 134).
 
WHETHER FRAUD RESULTS OR NOT. --Under this section, which penalizes any device, scheme or artifice to defraud, it is necessary only to prove the false statement and that the statement was made with an intent to defraud, whether fraud resulted or not. Curtis v. State, 99 Ga. App. 732, 109 S.E.2d 868 (1959) (decided under former Ga. L. 1957, p. 134).
   This section makes it a penal offense to do certain acts which would operate as a fraud regardless of whether a fraud was in fact successfully perpetrated or not. Cohen v. State, 101 Ga. App. 23, 112 S.E.2d 672 (1960) (decided under former Ga. L. 1957, p. 134).
   This section does not require the accomplished overt act of defrauding a person, but it is the use of the scheme, trick, or artifice with an intent to deceive which is prohibited. Curtis v. State, 102 Ga. App. 790, 118 S.E.2d 264 (1960) (decided under former Ga. L. 1957, p. 134).
 
INTENT, NOT LOSS, SUBJECT MATTER OF CRIME. --A scheme to defraud is such a scheme as is initiated by the perpetrator with an intent to defraud another and cause the other to suffer a pecuniary loss, but the intent, not the loss, is the subject matter of the crime. Curtis v. State, 99 Ga. App. 732, 109 S.E.2d 868 (1959) (decided under former Ga. L. 1957, p. 134); Curtis v. State, 102 Ga. App. 790, 118 S.E.2d 264 (1960) (decided under former Ga. L. 1957, p. 134).
   Intent to defraud is the gist of an offense under that portion of this section which prohibits the use of a device, scheme, or artifice to defraud. Curtis v. State, 102 Ga. App. 790, 118 S.E.2d 264 (1960) (decided under former Ga. L. 1957, p. 134).
 
VICTIM'S REACTION TO FRAUDULENT PRACTICE IS NOT ESSENTIAL ELEMENT before a conviction is authorized under this section. Curtis v. State, 102 Ga. App. 790, 118 S.E.2d 264 (1960) (decided under former Ga. L. 1957, p. 134).
 
DEFRAUDING IN FACT NEED NOT BE ALLEGED. --It is not necessary in an indictment u