primary liability
Primary liability is a legal obligation that attaches directly to a party whose actions or omissions constitute a violation of law or create a duty to perform. The party with primary liability is the one principally responsible for the underlying act or breach.
Secondary liability arises when another party becomes responsible only if the primary obligor fails to perform or pay. Typical examples include guarantors on debts or persons who aid or abet a tort or securities fraud.
In securities law, plaintiffs sometimes attempt to impose primary liability on secondary actors such as accountants, banks, or vendors involved indirectly in a fraudulent scheme. In Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148 (2008), the Supreme Court held that third parties who did not directly mislead investors could not be held primarily liable for securities fraud under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. This decision limited private securities fraud liability to actors who themselves engaged in deceptive conduct communicated to investors.
[Last reviewed in October of 2025 by the Wex Definitions Team]
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