Chris-Craft

Definition:

Chris-Craft Industries, Inc. v. Piper Aircraft Corp., 480 F.2d 341 (2nd Cir. 1973), cert. denied, 414 U.S. 910 (1973). One of the leading cases considering the Due Diligence Defense under Section 11. The US Court of Appeals for the Second Circuit discussed the Due Diligence obligation of underwriters and the importance of independent verification of information provided by the issuer. Specifically, the court stated that the underwriter “had an obligation to reach a careful, independent judgment based on facts known to it as to the accuracy of the registration statement” and that “if it was aware of facts that strongly suggested, even though they did not conclusively show, that the registration materials were deceptive, it was duty-bound to make a reasonable further investigation.”

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