Securities and Exchange Commission v. Ralston Purina Co.
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Securities and Exchange Commission v. Ralston Purina Co. | ||||||||||||
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Supreme Court of the United States | ||||||||||||
Argued April 28, 1953 Decided June 8, 1953 |
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Holding | ||||||||||||
SEC | ||||||||||||
Court membership | ||||||||||||
Chief Justice: Fred M. Vinson Associate Justices: Hugo Black, Stanley Forman Reed, Felix Frankfurter, William O. Douglas, Robert H. Jackson, Harold Hitz Burton, Tom C. Clark, Sherman Minton |
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Case opinions | ||||||||||||
Majority by: Clark Joined by: Warren, Black, Reed, Frankfurter, Douglas, Mentor Jackson took no part in the consideration or decision of the case. |
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Laws applied | ||||||||||||
Securities Act of 1933, § 4(1) |
Securities and Exchange Commission v. Ralston Purina Co., 346 U.S. 119 (1953), was a case in which the United States Supreme Court held that a corporation offering "key employees" stock shares is still subject to Section 4(1) of the Securities Act of 1933.
Note: The statute section is now Section 4(2), which, among other things, provides a registration exemption with the SEC when a "Public Offering" of securities is made.
The offerees must be in a position to "have access to the same kind of information that the act would make available in the form of a registration statement.... the focus of the inquiry should be on the need of the offerees for the protections afforded by registration." SEC v. Ralston Purina, 346 US 119, 126-127 (1953)[1]. Investors need to be "Sophisticated" investors. If this requirement is met, the company meets the Section 4(2) exemption.
In this case, the employees that were offered the stock option were "rank-and-file" employees, therefore, the offering was found to be a "Public Offering," which did not allow Ralston Purina to use the registration exemption.
Every single offeree must meet the "Ralston Purina" requirement or the exemption will not apply.
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- The court's opinion courtesy of Findlaw.com