SEC v. Ralston Purina Co.,
Annotate this Case
346 U.S. 119 (1953)
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U.S. Supreme Court
SEC v. Ralston Purina Co., 346 U.S. 119 (1953)
SEC v. Ralston Purina Co.
Argued April 28, 1953
Decided June 8, 1953
346 U.S. 119
Without complying with the registration requirements of the Securities Act of 1933, a corporation offered shares of its stock to a number of its "key employees." These employees were not shown to have had access to the kind of information which registration under the Act would disclose.
Held: these transactions were not exempted under § 4(1) of the Act as transactions "not involving any public offering." Pp. 346 U. S. 120-127.
(a) A transaction "not involving any public offering," within the meaning of § 4(1), is one with persons who do not need the protection of the Act. Pp. 346 U. S. 124-125.
(b) The number of offerees involved is not determinative of whether an offering is "public" within the meaning of § 4(1). P. 346 U. S. 125.
(c) The § 4(1) exemption does not deprive corporate employees, as a class, of the safeguards of the Act. Pp. 346 U. S. 125-126.
(d) In view of the broadly remedial purposes of the Act, it is reasonable to place on an issuer who pleads the § 4(1) exemption the burden of proving that the purchasers had access to the kind of information which registration under the Act would disclose. Pp. 346 U. S. 126-127.
200 F.2d 85 reversed.
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 F.2d 85. This Court granted certiorari. 345 U.S. 903. Reversed, p. 346 U. S. 127.