Originally from:
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
Preview Page
CHAPTER 45
SECURITIES LAW ISSUES AFTER INITIAL
FORMATION STAGE
Section
§ 45.01 What Is a "Security"?
§ 45.02 Why Regulate Securities?
§ 45.03 The Securities Act of 1933
§ 45.04 --Exemptions from the 1933 Act’s Registration Requirements
§ 45.05 The Securities Exchange Act of 1934
§ 45.06 State Blue Sky Laws
§ 45.07 Civil Liabilities under the 1933 Act
§ 45.01 What Is a "Security"?
The definition of a security was ambiguous under the Securities Act
of 1933 (1933 Act).1 The Supreme Court to laid down the following test:
"whether the scheme involves an investment of money in a common
enterprise with profits [coming] solely from the efforts"2 of others. The
Court has also outlined some common features of stock: (1) the right to
receive dividends contingent upon an apportionment of profits; (2) stock
is negotiable;3 (3) stock can be pledged or hypothecated; (3) stock
confers voting rights in proportion to the number of shares owned; and
(4) stock appreciates in value. If a person invests money into a common
enterprise and has been convinced he or she will receive profits solely
from the efforts of others, then the transaction is a security.4
But the flexible definition and variety of investment instruments has
led to many unconventional investments being defined as securities
including pyramid sale programs to land plots in mango groves.5
§ 45.02 Why Regulate Securities?
Securities laws exist, of course, to protect investors from fraudulent
or misrepresented purchase or sale of securities. The regulatory scheme
in the U.S. focuses on disclosure than regulation per se. Two important
federal laws that govern this material: the 1933 Act and the Securities
Exchange Act of 1934 (1934 Act).6
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman
