Securities and Exchange Commission v. Ralston Purina Co.
Litigants=Securities and Exchange Commission v. Ralston Purina Co.
FullName=Securities and Exchange Commission v. Ralston Purina Co.
Citation=73 S. Ct. 981; 97 L. Ed. 1494; 1953 U.S. LEXIS 2688
Prior=On a complaint brought by the
Securities and Exchange Commissionunder § 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 dismissedthe suit. 102 F.Supp. 964. The Court of Appeals affirmed. 200 F2d 85. The Supreme Court granted certiorari. 345 US. 903.
JoinMajority=Warren, Black, Reed, Frankfurter, Douglas, Mentor
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) [ [http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=CASE&court=US&vol=346&page=126 FindLaw for Legal Professionals - Case Law, Federal and State Resources, Forms, and Code ] ] . 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.
List of United States Supreme Court cases, volume 346
* [http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=CASE&court=US&vol=346&page=119 The court's opinion] courtesy of Findlaw.com
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