Montana oil and mining journal. [volume] (Great Falls, Mont.) 1931-1953, 1941-02-01
SEC Administrator Gives
Explanation OF Exemption
Of$lOO,OOO Stock Issues


supplementary letter stating the
name OF that jurisdiction has been
fled
"Tbe newspaper article hereto
fore referred to states as follows;
.. .NIontanans who have compileo
un, the requirement that they
furnish copies Of their hteralu il,.
70 the regional office have met win
insistance by the Securities q EA-
.hange Commission that they must
designate the states in which they
exnect to sell their securities.
.Tbe article no doubt has rel
o.ance 10 a letter from TINS OF
Stoa ~ an issuer who had attempt,
"a - meet the requirements Oh
81 222 Ca) (4) relating to
~ - of The jurisdictions in when
800 g nroDosed to sell the securl-
Ties by giving the following IN
formation: 1T is proposed TO olis'
throngh classified newspaper au-
,ertisements in the continental I'm
;,ad states We quoted the conan
IONS of the rule as above set IorIh
"a stated that in our opinion
his statement by that issue ala
NOT meet the requirements of Rule
222 (a) "a and pointed out tnas
the letter of notification shoulu
specifically list all of the jurisdic-
lions in which it is proposed 10
coll the securities being orfered.
ciroe an advertisement in a news
naper constitutes an offer to sell
and an offer to sell is a sale within
the meaning of Section 90 Oh
the Securities Act, it would appear
mat TO meet the requirements OF
Rule 222 (a) ca the issuer must
list all of the states in which
The advertisement would appear. II
the advertising is to appear in eV-
erv state in the Union so that an
offering could be said to be made
in every state, in our opinion, II
would be sufficient to state in the
letter of notification: 1T is PRO
POSED TO SELL THESE SECURI-
TIES IN EVERY STATE IN THE
UNITED STATES" But as here
tofore pointed out, IT IS NOT ONE
OF THE CONDITIONS OF THESE
EXEMPTIVE RULES THAT THE
ISSUER QUALIFY IN EVERY
STATE WHERE AN OFFICE is TO
BE MADE. Such qualification de-
ponds entirely upon the applca-
ton Of the Blue Sky laws of each
particular state.
"The newspaper article further
contains a reference to the provision
in Rule 221, paragraph (h), TO
the effect that mo exemption
under this regulation shall be avail
able for securities sold or de-
livered after sale in, or orders for
which are accepted from a State
while the right to offer or sell Sc
curities is prohibited. denied, or
suspended by statute or by any reg
ulatory body Of the State for any
reason other than the misconduct
Of a dealer in the securities The
general counsel's office of the COM
mission has advised that the ref
erence to the prohibition by statute
in the foregoing paragraph was
adopted to meet the possibility that
certain state statutes might flatly
prohibit the sale of certain types
Of securities and was not meant to
apply to statutes requiring quail
fications or licensing.
consequently, from the fore
pNng. ii can be seen that the writ
or Of the newspaper article sub
fitted by you misunderstood the
scope and effect OF the new regu-
lation We wish to thank you for
calling this matter to our atten-
ton and we would appreciate your
passing this reply on to the editor
of the Montana oil & Mining jour
nal. If you have any further ques-
tions regarding these new exemptive
rules. we shall be glad to con-
slider them.
Yours very truly,
DAY KARR,
Regional Administrator
S21 Second Ave.