SECURITIES & EXCHANGE COMMISSION v. RALSTON PURINA CO., 346 U.S. 119

Summary

The Commission filed an action against the corporation to enjoin it from offering unregistered shares of its stock to certain employees. The corporation made authorized, but unissued, common shares available to some of its employees, claiming that it was not required to register such securities because they were private within the scope of the private offering exemption of § 4 of the Securities Act of 1933, 15 U.S.C.S. § 77(d). Reversing the lower court, the Court held that whether the § 4 exemption applied turned on the particular class of persons affected so that persons who were able to fend for themselves did not need the protection of § 4. Absent a showing of special circumstances, employees were members of the investing public. The Court held that the corporation's employees did not have access to the information that would have been found in a registrations statement. Thus, they needed the protection offered by the registrations statements.