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Securities Regulation
Temple University School of Law
Madden, Thomas M.

I) Reasons to sell to investment banker
A) Less restrictions than public
B) If you list on stock exchange
C) Timing
D) Publicity- disclosure document
II) Offering agreement
A) Necessary parties for Issuer to sell to Investment Banker
B) Lawyers- check compliance for exchange and countries involved.
C) Accountants
1) Issuer’s review the offering
2) audit the documents.
D) Investment bankers
1) Want to control process as much as possible without becoming a fiduciary.
E) Bonds – indenture (trust feed) terms & conditions of bond.
1) Capitol secures a bond.
F) Lock up- Stockholders agree not to sell stock for 90 days min
G) Issuers attorneys draft prospectus (offering)
H) If registered deal, FCC will review documents
I) Preliminary document doesn’t contain price or #’s of security.
III)1933 Act
A) § 5 registration- covers primary and secondary distributions
B) 4(1) exemption is only for trading.
1) not available to a controlling person who sells a significant amount of securities to the public in a relatively short amount of time.
2) Control means potential control- possession, direct, or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise. Pg. 132.
3) Affiliate is any person who is a director or officer of the issuer or a person who owns 10% or more of the issuer’s voting securities.
IV)See different types of offering, securities, prospectus
V) Sec v. Ralston Purina 349 US 119 Before Reg D
A) Was company offer of stock to employee a public offering?
1) It is important if employees are shown to be able to fend for themselves. Ie. Access to information.
VI)Reg D
A) Provides non exclusive exemption from 4 (2) which means private placement.
1) Reg 504 (up to 1 million) & Reg 505 (up to 5 million)
a Both are tied to section 3 (b) small offering exemption
2) Reg 506 (Focus on this one) pg. 146
a Accredited invester (AI) + 35 non AIs can purchase
(i) This limits purchasers
(ii) No general solicitation (as defined in 502 (c))
(iii)Has to be protected or control. Can’t reach public.
(iv) Info to non- AIs
(v) Issues must rea

y hold security of another company.
XII) Sec v. Ralston Purina 346 U.S. 119. before reg d.
A) was company offer of stock to employee public offering?
B) Pg. 145- shown to be able to fend for themselves. Access to information is important
XIII) Reg D. provides non-exclusive exemption under § 4(2). Which means private placement.
A) Reg 504 – up to 1 m.( tied to Sec 3(b). small offering exemption)
B) Reg 505 up to 5 m. (tied to Sec 3(b). small offering exemption)
XIV) Focus on Reg 506 pg. 146
1) Accredited invested (AI) + 35 non AI can purchase.
a This limits purchasers
2) No general solicitation (defined in 502(c)) has to be protected or control. Can’t reach joe public.
3) Infor to non AIs
4) Issuer must reasonably believe non-AI is sophisticated enough to buy. (due diligence issue)
Issuer must make sure purchasers is not U/Ws.