Securities and Exchange Commission v. Ralston Purina Co.

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Securities and Exchange Commission v. Ralston Purina Co.
Supreme Court of the United States
Argued April 28, 1953
Decided June 8, 1953
Full case name: Securities and Exchange Commission v. Ralston Purina Co.
Citations: 346 U.S. 119; 73 S. Ct. 981; 97 L. Ed. 1494; 1953 U.S. LEXIS 2688
Prior history: On a complaint brought by the Securities and Exchange Commission under § 20 (b) of the Securities Act of 1933, seeking to enjoin respondent's unregistered offerings of its stock to its employees, the District Court held the exemption of § 4 (1) applicable and dismissed the suit. 102 F.Supp. 964. The Court of Appeals affirmed. 200 F2d 85. The Supreme Court granted certiorari. 345 US. 903.
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
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.
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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[edit] References

  1. ^ FindLaw for Legal Professionals - Case Law, Federal and State Resources, Forms, and Code

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