The Stock Market Essay

Introduction

            In response to the worldwide depression and the 1929 stock market crash, Congress passed the Securities Act in 1933.  The stock market crash was primarily attributed to the fraudelent sale of bad stocks, notes, bonds and a number of other securities.  These sales were said to have been made possible by uniform complicity on the part of market professionals who tolerated this practice. The Securities and Exchange Commission was formed for the purpose of enforcing the Securities Act 1933.[1]

The 1933 Act was intended to protect investors dealing on the stock market and as a safeguard against fraudulent trading of bad stock.  As a result the Act initially required  that all stock offered to the public must be registered with the Securities and Exchange Commission. However, the Act evoleved to make provision for some limited exemptions in respect of securities that were sold directly to a limited number of investors.  These arrangements are commonly referred to as private placements.

            Background to The Securities Act 1933

            From about September 1929 to July 1932 the New York Stock Exchange suffered losses in excess of 83 percent in value.[2]The far reaching consequences both nationally and abroad cannot be denied.  Banks suffered financial losses, companies suffered losses and the public suffered loss of savings, jobs and most of all the integrity of the stock market was lost to institutions and individuals as a whole.  The resulting Great Depression was no surprise at all.[3]

            Trading on the Stock Market was characterized by “speculative euphoria.”[4]The prosperity that followed the end of the First World War gave way to reckless trading in the sense that trade was unregulated, ill-informed and basically highly speculative.[5]  The US Government made no effort to regulate trade on the securities’ markets and there were no government requirements for firms to disclose information for the benefit of investors.  The result was that many investors relied on what amounted to hearsay and recent history of high rates. A firm could if it was so inclined disclose matters such as its financial statements, business strategies and executive actions, but was not required to do so.[6]

            Congress responded by enacting legislation, specifically the Securities Act 1933 and the Securities Exchange Act 1934 which were calculated to revive the stock market and to restore public confidence in trade and investment.  Both Acts where characterized by four essential elements:

 “First, that the public should be protected from fraud and manipulation, but with the least possible interference to honest business enterprise. Second, the government’s role should be limited so as not to be construed as an approval or guarantee of any security. Third, noessentially important element attending the issuance of securities should be concealed from the investing public. Finally, persons sponsoring the investment of other people’s money should be held to the high standards of a trustee.”[7]

            The 1933 Act as it was first implemented required disclosure by virtue of two methods.  Firms offering stocks to the public were required to register statements and dealers were required to register prospectuses.  The mandatory statements contained information about the firm’s assets and liabilities as well as its business ventures and any other financial information particularly descriptions of the stocks offered.  The prospectuses prepared by dealers would contain abbreviated forms of these statements for investors who expressed an interest in the stocks offered.[8]

            The 1934 Act extended the disclosure requirements contained in the 1933 Act by providing for solicitations by proxy to be added to the disclosure list.[9]  Reports on proxy solicitations contained information about shareholder voting in respect of executive action on the part of the company.  These kinds of actions could include director appointment and the conduct of annual meetings.[10]The Securities Exchange Act 1934 basically required that all information relevant to the company stock transactions on the part of both company officers and its shareholders become part of the public record. [11]

            The obvious intent of the 1933 and 1934 Acts was to align disclosure with honesty.  However, there was a significant rejection of the new disclosure requirements which only related to companies that listed their securities with the stock exchange and rejection took the form of delisting.  Many opted to trade “over-the-counter” rather than on the stock exchange market.[12] The alleged benefits for investors would therefore be compromised by a concerted delisting practice and the government realized that it had to find a viable medium.  As a result the 1934 Act was amended in 1936.[13]

            The amended to the 1934 Act provided two means by which to discourage delisting.  First it exempted companies and firms who had traded securities prior to March 1934 from most of the disclosure regulations contained in the 1934 and 1933 Acts.  Moreover, Section 78 permitted an application for extension of the exemption from disclosure regulations on the following grounds:

“No application to extend unlisted trading privileges to any security…shall be approved unless the applicant exchange shall establish to the satisfaction of the Commission that there exists in the vicinity of such exchange sufficiently widespread public distribution of such security and sufficient public trading activity therein to render the extension of unlisted trading privileges on such exchange thereto necessary or approproiate in the public interest or for the protection of investors.”[14]

            Several changes would follow as both the Securities Act 1933 and the Securities Act 1934 were amended.  In fact the Securities Act 1933 was amended at least 37 times by 1982.[15] One of the most problematic changes related to private placement securities as envisaged in the government’s desire to discourage delisting.  Like many parts of the 1933 and 1934 Acts, these changes would suffer revision and changes with the result that confusion and complexity might have compromised their overall impact.

Private Placement Law

            Private placement generally encompasses the offer for sale of a security that is not public and thereby exempt from public disclosure pursuant to Sections 3(b) or 4(2) of the Securities Act 1933 or by virtue of Regulation D.[16]  Regulation D was added to the 1933 Act in 1982.[17] Section 3(d) provides that the Securities Commission may exempt any of the disclosure requirements under the 1933 and 1934 Acts if it is satisfied either by appliaction or of its own volition that:

“…such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by this subchapter.”[18]

Section 4(2) provides simply that “transactions by an issuer not involving any public pffering” are “exempted transactions.”[19] Section 4(1) exempts offers by “any person other than an issuer, underwriter, or dealer.”[20]

            Regulation D contains essentially six rules that are contained in Rules 501-506 that establish three transactions that are exempt from registration requirements contained in the Securities Act 1933.[21] Rules 501-503 provide relevant definitions as well as terms and conditions applicable to Regulation D.  The actual exemptions are provided for in Rules 504-506.

            By virtue of Rule 504 securities’transaction valued at less than US$1,000,000 that are offered for sale within a consecutive period of twelve months are eligible for exemption.[22] There is no limit to the numbers of allowable commissions, resale of securities and investors.[23] Rule 505 applies to securities valued in excess of US$5,000,000 that are sold within a consecutive period of one year.  It permits sale to 35 non-accredited investors and sale to any number of accredited investors.  However, advertisement or soliciation of these sales are prohibited.[24]

            Rule 506 does not set a dollar value limit on securities and is applicable to all entities offering sale to thirty-five non-accredited purchasers or less or to an indefinite number of accredited investors. However, unlike Rules 504 and 505, under Rule 506 an issuer is required to subjectively ascertain that the non-accredited purchaser is of a particular sophistication either in an individual capacity or together with a purchaser representative.  Offerings under Rule 506 like offerings under 505 may not be the subject of solicitation or advertising.[25]

            A credited investor is defined by Regulation D Rule 501(a) as any person who falls under a long list of qualifications.  These qualifications include banks, savings and loans institutions, private companies, corporations, trusts, person’s whose “individual net worth or joint net worth at the time of purchase exceeds $1.000,000,”[26] a peron whose net worth similarly exceeds $2,000,000, a trust containing at least $5,000,000 and  “any entity in which all of the equity owners are accredited investors”.[27]

            The Committee on Federal Regulation of Securities of the American Bar Associations’s Business Law Section in a letter addressed to John White, Director of Divison of Corporation Finance, Securities and Exchange Commissions reviewed the state of the law prior to the implementation of Regulation D and complained that the line between private and public offerings was blurred.  The letter specifically states that:

“For many decades, the law applicable to private offerings has been vague and unclear and, in many respects, has been more the subject of lore than law.”[28]

            The previous Section 4(2) of the Securities Act 1933 was so simple that it created confusion in the sense that it was difficult to understand or discern its paramenters.  The US Supreme Court observed in SEC v. Ralston Purina Co., 346 U.S. 119, 122 (1953) that:

“The Securities Act nowhere defines the scope of Section 4(2)’s private offering exemption.  Nor is the legislative history of much help in staking out its boundaries.”[29]

            More confusion arose under Section 2(a)(11) of the 1933 Act which provided a defintion of “underwriter” when taken together with Sections 4(1) and 4(3) of the 1933 Act.  These provisions placed restrictions on the sale of offering via third parties.  By implication the definition of underwriter is a third party.  Section 2(a)(11) provides as follows:

“The term ‘underwirter’ means any person who has purchased from an issuer with a view to, or offers or sells for an issue in connection with, the distribution of any securities…As used in this paragraph, the term ‘issuer’ shall include…any person directly or indirectly controlling or controlled by the issuer, or any person under direct or indirect common control with the issuer.”[30]

The word distribution is not defined by the 1933 Act and thereby creates more confusion.  In Re: Oklahoma-Texas 2 S.E.C. 764 (1937) the Securities Exchange Commission commented as follows:

“Distribution…comprises the entire process by which in the course of a public offering a block of securities is dispersersed and ultimately comes to rest in the hands of the investing public.”[31]

Distribution is therefore taken to mean any offering that ends up in the public domain.  Complicating matters the word control or controlling has a far reaching defintion in the 1933 Act. Rule 405 provides the following definition:

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“The term ‘control’ (including the terms ‘controlling’, ‘controlled by’ and ‘under common control with’) means the possession, direct or indirect, of the power to direct or cause the directionof the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.”[32]

            Problems associated with private placement exemptions under Section 4(2) of the Securites Act 1933 were visible as early as 1935.  An opinion released by the Securities Exchange Commission’s General Counsel attempted to clairify the brevity associated with Section 4(2) in its Securities Act Releas No. 285.  To begin with the Counsel explained that any offering that did not go out to more than 25 persons cannot be said to be large enough to be considered a public offering. In this vein a public offering would be determined on the particular facts of the case.[33]

            The Securities Exchange Commission listed a number of factors that would be taken into consideration in determining what would amount to a public offering.  The list included the following:

The number of persons that the securities were offered up for sale to and an attempt to offer said sale would amoung to an offer.

The relationships of the persons to whom securities were offered to the person offering the securities for sale. For example, offering a security to a person with special knowledge of person offering the security would not likely be regarded as public offerings.

The number and size of securities being offered.

The manner or method by which the offering was made.[34]

Adding on, the General Counsel said that in the event the person buying the securities offered indtended to distribute the securities then that purchaser would be considered to be an underwriter within the meaning of the Securities Act 1933 with the result that any subsequent sale of these securities:

“…would, as a general rule, not be exempt until at least a year after the purchase of the securities by the dealer.”[35]

                The leading case on the quesiton of private placement was and likely still is the SEC v Realson Purina Co., 346 U.S. 119 (1953).  In this case, Ralston Purina Co. offered some of its stock to some of its “key employees” without first applying for registration of the stock under the provisions of the Securities Act 1933.[36]  The Securities and Exchange Commission filed a complaint pursuant to Section 20(d) of the Securities Act 1933 with a view to truncating the company’s “unregistered offerings of its stock to its employees.”[37] The court at first instance held that the company was exempt under Section 4(1) of the 1933 Act. This decision was upheld by the Court of Appeals and the Securities and Exchange Commission appealed to the US Supreme Court with the result that the lower courts’ decisions were reversed.

            The Supreme Court ruled that in order to be public an offer did not have to be made to the world at large.  Offers made to a particular group do not necessarily take it out of the public domain.  Moreover, the intent of the private exemption is to protect potential purchases by making full disclosure of certain relevant information.  The Supreme Court went on to state, that given this background:

“The natural way to interpret the private offering exemption is in light of the statutory purpose…the applicability of Section 4(1) should turn on whether the particular class of persons affected needs the protetion of the Act.”[38]

Accordingly the US Surpreme Court held that the Act of 1933 did not expressly or by implication designate a certain number as outside the public domain.  Therefore it would be inconsistent with the spirit and intent of the legistive purpose to “deprive corporate employees as a class, of the safeguards of the Act.”[39] The US Supreme Court went onto hold that:

“Absent such a showing of special circumstances, employees are just as much members of the investing “public” as any of their neighbors in the community.”[40]

                This attempt by the US Supreme Court to narrow the gap between private and public placements can be said to have added to rather than removed the boundaries betweent them.[41] The American Bar Association after examining the case law and the legislation relating to the private placement of securities came to a number of conclusions in respect of the shorffall associated with the Securities Act 1933.  If concluded that the law relating to sales by control persons and those holding restricted securities does not:

“address sales by control persons, who are ‘issuers’…or resales by non-control persons of securities acquired without registration from issuers and control persons.”[42]

            The so called “safe harbor” clause contained in Rule 144 which was added to the text of the Securities Act 1933 was replete with difficulties.[43] This rule provided for a “non-exclusive safe harbor” in respect of sales offered by “affiliates”(control persons) and the reselling of “restricted securities” on the part of “non-affiliates.”[44] This rule resulted in three significant changes in the law of private placements.  In the first place it made provision for “bright-line holding periods” for one year in which time the seller was at liberty to sell certain “amounts of the securities” provided it did so within the limites contained in the rule.[45]  After two years of holding, the securities could be sold liberally.  Secondly, the rule:

 “defined the circumstances in which successive holders could tadk their holding.”[46]

Thirdly, the Commission in discerning whether or not a seller was by definition an “underwriter” was no longer required to take into account the seller’s “investment intent” or “change in circumstances.”[47]

            After ten years this rule was replaced by Regulation D which is discussed in greater detail above.  Suffice it to state for present purposes that the new Regulation brought together a number of circumstances in which securities could be privately placed.  In 1990 Rule 144A was adapted which became Resale Safe Harbor II and to a certain extent relaxed the previous safe harbor provisions.  It provides for the:

“resales of securities by persons other than issuers to a new class of investors known as ‘qualifired institutional buyers.’ (QIBs)”[48]

The results of Rule 144A was summarised by the American Bar Association as follows:

Regulation D did not limit offers except that certain offers of sale qualified under the Regulation not be the subject of solicitation or advertising, Rule 144A does not permit offers of sale to “persons who not QIBs”[49]

QIB Purchasers can be unlimited.

There were limited or no reporting conditions.

The seller is only required to take “reasoanble steps to ensure that the purchaser” knows that the vendor “may be relying on Rule 144AA.” Once this is established the vendor remains unaffected “by the purchaser’s subsequent actions.”[50]

The overall impact of the implementation of Rule 144A is the opening of a loophole for which invsetors could circumvent the registration requirements of the Securities Act 1933.  For example, an investment bank may purchases securities that are exempt from public disclosure under the act “pursuant to purchase agreement that look very much like underwriting agreements”[51]and may offer those securities to QIBs without offending the provisions of Rule 144A.

            Other consequences follow from the implementation of Rule 144A.   William J. Whelan explains that the impact of Rule 144A is that a “SEC-registered exhange offer” typically follows a Rule 144A offering.[52]  This exchange offer is referred to a as an “Exxon Capital exchange offer” and is described as a scenario:

“…where the issuer (usually pursuant to a contractual commitment in the Rule 144A offering documents) offers to holders of the Rule 144A securities to exchange the Rule 144A securities for similar securities which have been registered and, therefore are freely resalable.”[53]

            The Wallman Report of 1996 recommended the restructuring of the public offering procedure and that issuers in respect of resales be limited to firm insiders with holding of at least ten percent voting entitlement and to persons holding at least twenty percent of the voting entitlement.[54] The Securities Commission responded with a document entitled Securities Act Concept Release which acknowledged that the there was an “erosion of distinctions between public and private transactions.”[55]  Although the Commission made several proposals calculated to draw sharper distinctions between private and public placements no changes were made in the law.

            Again in its Aircraft Carrier Release which was published in 1998 the Securities Exchange Commission agreed that integration of public and private placement offers as it currently stood under the law “had resulted in uncertainty”.[56]  In this report the SEC made a number of proposals with a view to providing:

 “a safe harbor to allow an abandoned private offering to be followed by a public offering and vice versa.”[57]

However these proposals only came to fruition in 2001 when eventually Rule 155 was implemented under the Securities Act 1933 in.[58]  The over all intent is to faciliate the process by which an abandoned private offer can be placed for public offering and “vice versa.”[59]By virtue of Rule 155(b) a private offering may be offered as a registered public offering if:

None of the securities previously offered for private placement had been actually sold.

All private placements have been withdrawn prior to public registration.

The prospectus which is filed for public registration discloses information about the previous private placement.

The public registration is not place earlier than one month following the withdrawal of the private offering.[60]

Rule 155(c) makes provision for the reverse process.  In other words a publically placed offering may be subject to private placement if the:

Securities placed publically have not been sold.

None of the registered offering has been withdrawn.

The private offering cannot commence eaerlier than one month from the withdrawl of the public placement.

Each person to whom the private placement is addressed is informed of the previous public offering.[61]

Edward Greene cautions however, that while compliance with the conditions provided for under Rule 155 is strictly required, compliance will not automatically ensure conversion if the transaction form “part of a plan or scheme to avoid registration.”[62]

            The American Bar Association’s Section of Business Law identified some key difficutlies with the current state of the law on private placements despite the many amendments over the years.  The greatest difficulty is the blurrin of the line between private and public placements notwithstanding the shifting of boundaries over the years.[63] Moreover, too many definitions have created discrepancies for example:

“multiple definitions of sophisticated investors who do not require the protection of registration and different time periods to avoid integration.”[64]

The American Bar Association’s Section of Business Law the Securities Exchange Commission has made a number of proposals and “concept releases” in respect of private placement and has even received proposals from experts but has failed to adopt many of them.[65] It is therefore not surprising that the development of the law regarding private placements remains at an unsatisfactory place.

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            Chris Yenkey argues that the difficulty over the last seventy years has been balancing democratic principles of equity and economic prosperity.  On the one hand, transparence is necessary and on the other hand recognizing the expertize of a certain class of traders is also essential.  Yenkey explains that in the context of modern markets:

“…there exists a significant effort to install a regulatory environment that, while neither perfect not complete, enhances expectations of transparent transactions and facilitates a greater degree of dimocratic market participation and access to information that can augment rational decision-making.”[66]

This explanation adequately accounts for the confusion and complexity of the current laws relating to private placement of securities under the Securities Act 1933.  Finding a mediam in which equity and equality can co-exists with the result that the trade is created and flourishes is difficulty when those coming to the market are not on an equal footing.

Conclusion

            The courts when determining the propriety of private placements, as seen in the case of SEC v. Ralston Purina Co., 346 U.S. 119, 122 (1953) commence with the concept of freedom of information.  It is therefore fair to conclude that the exemptions relative to private placements are designed to ensure that departure from the principles of public disclosure and information sharing are not taken lightly.  Public disclosure is calculated to circumvent the propensity for “unfair trading practices.”[67] Its primary concern is to guarantee that investors derive a greater benefit and at the same time ensure that the market is democratically structured with the result that resources are allocated fairly and adequately.[68]

            In keeping with these ideals and the shifting of economic norms and practices the Securities Act 1933 will likely see many more changes in the future.  That said, Yenkey notes that the goal remains constant and that goal is to ensure democratic trading and at the same time recognize disparities among traders on the market.[69]  Striking a fair balance is not simple and as long as Congress and the Securities Exchange Commission aspires to strike a fair balance in a constantly changing economic environment the boundaries between public and private offerings may never be sharply defined.

Bibliography

American Bar Association, Section of Business Law. “Letter to John White, Director of Divison of Corporation Finance, Securities and Exchange Commissions .”March 22, 2007 available online at: http://209.85.165.104/search?q=cache:ZklQdqN8_5sJ:www.abanet.org/buslaw/committees/CL410000pub/comments/20070322000000.pdf+history+of+Private+Placement+Law+and+the+Securities+Act+of+1933&hl=en&ct=clnk&cd=1&gl=us Retrieved November 27, 2007

Bierman, Harold Jr. The Great Myths of 1929 and the Lessons to be Learned. New York: Greenwood Press, 1991.

Galbraith, Kenneth. The Great Crash 1929. Boston: Houghton Miffin Company, 1988

Greene. Edward. U.S. Regulation of the International Securities and Derivatives Markets Aspen Publishers, 2005

Mahoney, Paul. “The Political Economy of the Securities Act 1933”. The Journal of Legal Studies Vol 30, No.1 (Jan. 2001) pp 1-31

Plant, Marcus. “Corporations: Securities Exchange Act: Unlisted Trading Privilieges.” Michigan Law Review, Vol 37 No.2 (Nov. 1938) pp 98-103

Re: Oklahoma-Texas 2 S.E.C. 764 (1937)

Report of the Advisory Committee on Corporate Disclosuer to the Securities and Exchange Commission, 1977

SEC v. Ralston Purina Co., 346 U.S. 119, 122 (1953)

Securities Act Release No. 285 1 CCH Fed. Sec. L. Rep. 2740 (Jan. 24, 1935)

Securities Act 1933

Securities Exchange Act 1934

SEC Rep. of The Advisory Committee on the Cap. Formation and Reg. Process 33 Fed Law Report. Vol. 85 p. 834  July 24, 1996

Seilgman, Joel. The Transformation of Wall Street: A History of the Securities Exchange Commission and Modern Corporate Finance. US: Aspen Publishers, 2003

Whelan, William, J. Securities Offerings ,2004: What Issuers and Underwriters’ Counsel Need to Know Now.Practising Law Institute. 2004

Wigmore, Barrie, A. The Crash and Its Aftermath: A History of Securities Markets in the United States, 1929-1933. Connecticut: Greenwood Press.

Yenkey, Chris. Transparency, Democracy and the SEC: 70 Years of Securities Market Regulation.(2007) Available online at: http://209.85.165.104/search?q=cache:NruRTAEVIO8J:www.people.cornell.edu/pages/cby2/Yenkey%2520Transparency%2520and%2520the%2520SEC%25202006.pdf+House+of+representatives+investigate+the+1929+stock+market+crash&hl=en&ct=clnk&cd=19&gl=us Retrieved November 30, 2007

[1] Wigmore, Barrie, A. The Crash and Its Aftermath: A History of Securities Markets in the United States, 1929-1933. Connecticut: Greenwood Press. , 1985 p. 526

[2] Bierman, Harold Jr. The Great Myths of 1929 and the Lessons to be Learned. New York: Greenwood Press, 1991. P. 120

[3] Wigmore, Barrie, A. The Crash and Its Aftermath: A History of Securities Markets in the United States, 1929-1933. Connecticut: Greenwood Press. , 1985 p. 3

[4] Galbraith, Kenneth. The Great Crash 1929. Boston: Houghton Miffin Company, 1988 p.8

[5] Ibid, pp 66-87

[6] Bierman, Harold Jr. The Great Myths of 1929 and the Lessons to be Learned. New York: Greenwood Press, 1991.

[7] Report of the Advisory Committee on Corporate Disclosuer to the Securities and Exchange Commission, 1977 pp 557-558

[8] Seilgman, Joel. The Transformation of Wall Street: A History of the Securities Exchange Commission and Modern Corporate Finance. US: Aspen Publishers, 2003 pp 1-38

[9] Ibid

[10] Ibid

[11] Ibid

[12] Plant, Marcus. “Corporations: Securities Exchange Act: Unlisted Trading Privilieges.” Michigan Law Review, Vol 37 No.2 (Nov. 1938) pp 98-103

[13] Plant, Marcus. “Corporations: Securities Exchange Act: Unlisted Trading Privilieges.” Michigan Law Review, Vol 37 No.2 (Nov. 1938) pp 98-103

[14] Securities Exchange Act 1934 (as amended) Section 78(1)(f)

[15] Mahoney, Paul. “The Political Economy of the Securities Act 1933”. The Journal of Legal Studies Vol 30, No.1 (Jan. 2001) pp 1-31

[16] Securities Act 1933

[17] Ibid Regulation D

[18] Ibid Section 3(b)

[19] Ibid Section 4(2)

[20] Ibid Section 4(1)

[21] Ibid Regulation D, Rules 501-516

[22] Securities Act 1933 Regulation D, Rule 504

[23] Ibid

[24] Ibid Regulation D Rule 505

[25] Ibid Regulation D Rule 506

[26] Ibid Regulation D Rule 501(a)(5)

[27] Ibid Regulation D Rule 501(a)(8)

[28] American Bar Association, Section of Business Law. “Letter to John White, Director of Divison of Corporation Finance, Securities and Exchange Commissions .”March 22, 2007 available online at: http://209.85.165.104/search?q=cache:ZklQdqN8_5sJ:www.abanet.org/buslaw/committees/CL410000pub/comments/20070322000000.pdf+history+of+Private+Placement+Law+and+the+Securities+Act+of+1933&hl=en&ct=clnk&cd=1&gl=us Retrieved November 27, 2007

[29] SEC v. Ralston Purina Co., 346 U.S. 119, 122 (1953)

[30] Secutities Act 1933 Section 2(a)(11)

[31] Re: Oklahoma-Texas 2 S.E.C. 764 (1937)

[32] Op. cit. Rule 405

[33] Securities Act Release No. 285 1 CCH Fed. Sec. L. Rep. 2740 (Jan. 24, 1935)

[34] Ibid

[35] Securities Act Release No. 285 1 CCH Fed. Sec. L. Rep. 2740 (Jan. 24, 1935)

[36] SEC v Realson Purina Co., 346 U.S. 119 (1953)

[37] Ibid

[38] SEC v Realson Purina Co., 346 U.S. 119 (1953)

[39] Ibid

[40] Ibid

[41] American Bar Association, Section of Business Law. “Letter to John White, Director of Divison of Corporation Finance, Securities and Exchange Commissions .”March 22, 2007 available online at: http://209.85.165.104/search?q=cache:ZklQdqN8_5sJ:www.abanet.org/buslaw/committees/CL410000pub/comments/20070322000000.pdf+history+of+Private+Placement+Law+and+the+Securities+Act+of+1933&hl=en&ct=clnk&cd=1&gl=us Retrieved November 27, 2007

[42] American Bar Association, Section of Business Law. “Letter to John White, Director of Divison of Corporation Finance, Securities and Exchange Commissions .”March 22, 2007 available online at: http://209.85.165.104/search?q=cache:ZklQdqN8_5sJ:www.abanet.org/buslaw/committees/CL410000pub/comments/20070322000000.pdf+history+of+Private+Placement+Law+and+the+Securities+Act+of+1933&hl=en&ct=clnk&cd=1&gl=us Retrieved November 27, 2007

[43] Ibid

[44] Ibid

[45] Ibid

[46] American Bar Association, Section of Business Law. “Letter to John White, Director of Divison of Corporation Finance, Securities and Exchange Commissions .”March 22, 2007 available online at: http://209.85.165.104/search?q=cache:ZklQdqN8_5sJ:www.abanet.org/buslaw/committees/CL410000pub/comments/20070322000000.pdf+history+of+Private+Placement+Law+and+the+Securities+Act+of+1933&hl=en&ct=clnk&cd=1&gl=us Retrieved November 27, 2007

[47] Ibid

[48] Ibid

[49] American Bar Association, Section of Business Law. “Letter to John White, Director of Divison of Corporation Finance, Securities and Exchange Commissions .”March 22, 2007 available online at: http://209.85.165.104/search?q=cache:ZklQdqN8_5sJ:www.abanet.org/buslaw/committees/CL410000pub/comments/20070322000000.pdf+history+of+Private+Placement+Law+and+the+Securities+Act+of+1933&hl=en&ct=clnk&cd=1&gl=us Retrieved November 27, 2007

[50] Ibid

[51] Ibid

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    Dr. Pushpa Bhatt and Sumangala J. K (2011) studies Impact of Book Value on Market Value of an Equity Share – An Empirical Study in Indian Capital Market. They attempt to find the explanatory power of book value in explaining the variations in equity market value. Then attempt is made to compare the same...