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Securities and Exchange Comm

Law Dictionary

Law Dictionary

Featuring Black's Law Dictionary 2nd Ed.
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Corporations Keyed to Hamilton

Citation. Securities & Exchange Com. v. Electric Bond & Share Co., 18 F. Supp. 131, 1937 U.S. Dist. LEXIS 2067, 1 SEC Jud. Dec. 312 (D.N.Y. Jan. 29, 1937)

Brief Fact Summary. The Securities and Excahnge Commission, (Petitioner), brought this complaint seeking to enjoin unregistered offerings of treasury stock by Ralston Purina Co., (Respondent).

Synopsis of Rule of Law. Whether a transaction by an issuer involves a public offering depends on the need of the offerees for the protections afforded by registration.

Facts. Respondent has facilities scattered throughout the nation staffed by 7,000 employees. The company has a policy of encouraging stock ownership among its employees. Selling nearly $2,000,000 of stock to them without registration. The company offers stock to “key employees.” This characterization is not based on an organization chart. It includes an individual eligible for promotion, one who influences others, whom the employees look to in a special way, or who is sympathetic to management among other factors. The Securities and Exchange Commission brought this complaint seeking to enjoin Respondent’s unregistered offerings. The District Court held the exemption applicable and dismissed the suit. The Court of Appeals affirmed.

Issue. Whether Respondent’s offerings of treasury stock to its “key employees” are exempt as transactions by an issuer not involving any public offering.

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