Document: 346 U.S. 119 73 S.Ct. 981 97 L.Ed. 1494 SECURITIES AND EXCHANGE COMMISSIONv.RALSTON PURINA CO. No. 512. Argued April 28, 1953. Decided June 8, Mr. Roger S. Foster, Washington, D.C., for petitioner. Thomas McPheeters, St. Louis, Mo., respondent. Justice CLARK, delivered the opinion of Court. 1 Section 4(1) Securities Act 1933 exempts 'transactions by an issuer not involving any public offering'1 from registration requirements § 5.2 We must decide whether Ralston Purina's offerings treasury stock to its 'key employees' are within this exemption. On a complaint brought Commission under 20(b) seeking enjoin respondent's unregistered offerings, District Court held exemption applicable and dismissed suit.3 The Appeals affirmed.4 question has arisen many times since was passed; apparent need define scope private offering prompted certiorari. 345 903, 643. 2 Purina manufactures distributes various feed cereal products. Its processing distribution facilities scattered throughout United States Canada, staffed some 7,000 employees. At least 1911 company had policy encouraging ownership among employees; more particularly, 1942 it made authorized but unissued common shares available them. Between 1947 1951, period covered record in case, sold nearly $2,000,000 employees without so doing use mails. 3 In each these years, corporate resolution sale 'to * who shall, solicitation Company or officers employees, inquire them as how purchase Company.' A memorandum sent branch store managers after adopted, advised that 'The only whom will be those take initiative interested buying at present market prices.' Among responding offers were with duties artist, bakeshop foreman, chow loading clerical assistant, copywriter, electrician, clerk, mill office order credit trainee, production stenographer, veterinarian. buyers lived over fifty widely separated communities Garland, Texas, Nashua, New Hampshire Visalia, California. lowest salary bracket purchasing $2,700 1949, $2,435 1950 $3,107 1951. shows 1947, 243 bought stock, 20 1948, 414 411 1950, 1951 offer, interrupted litigation, produced 165 applications purchase. No records kept made; estimated number 500. 4 bottoms claim on classification all offerees organization. position trial 'A key employee is confined organization chart. It would include individual eligible promotion, especially influences others advises others, person look special way, individual, course, carries responsibility, sympathetic management ambitious feels likely promoted greater responsibility.' That conceded. 5 nowhere defines 4(1)'s Nor legislative history much help staking out boundaries. problem first dealt House Bill, H.R. 5480, 73d Cong., 1st Sess., which exempted through underwriter; *.' bill, reported Committee, added 'and offering.' H.R.Rep. 85, Sess. 1. This thought one transactions 'where there no practical (the bill's) application where benefits too remote.' Id., 5.5 thus delimited became law.6 assumed shape deletion 'not underwriter' 203(a) Exchange 1934, 48 Stat. 906, change regarded elimination superfluous language. 1838, 2d 41. 6 Decisions comparable exemptions English Companies Acts state 'blue sky' laws, statutory antecedents federal securities legislation have thing clear—to public, offer open whole world.7 Comm. v. Sunbeam Gold Mines Co., 9 Cir., 1938, 95 F.2d 699, 701, point dealing stockholders two corporations about merged. Judge Denman observed that: 7 'In broadest meaning term 'public' distinguishes populace large groups members segregated because interest characteristic. Yet such distinction inadequate purposes; manifestly, redheaded men, residents Chicago San Francisco, existing General Motors Corporation American Telephone & Telegraph Company, less 'public', every realistic sense word, than unrestricted world large. Such offering, though everyone may choose apply, none character, means used select particular individuals bear sensible relation purposes selection made. To determine between 'private' context, essential examine circumstances sought established consider achieved distinction.' 8 courts below purported apply test. held, language decision, purpose bears 'sensible relation' class chosen,' finding sole 'selection' keep part business operating personnel spread departments activities business.'8 treated case 'an solicitation, selected group issuer, most already when made, enabling secure proprietary increase them.'9 Exemption question. design statute protect investors promoting full disclosure information necessary informed investment decisions.10 natural way interpret light purpose. Since exempt 'there application,' applicability should turn persons affected protection Act. An shown able fend themselves transaction 10 us go step further hold substantial public' 4(1). 'whatever circumstances, consistently interpreted being inapplicable involved.' But seem 'public offering' few many.11 well rarely exempt. Indeed nothing prevents commission, enforcing statute, using kind numerical test deciding investigate claims. warrant superimposing quantity limit matter interpretation. 11 exemption, we construe it, does deprive class, safeguards agree come 4(1), e.g., executive their access same act make form statement.12 Absent showing just investing neighbors community. Although do rely rejection 1934 amendment specifically supports conclusion. Managers, commenting Conference Report, said 'the participants stock-investment plans great afforded availability concerning they work other public.' 41.13 12 Keeping mind broadly remedial legislation, imposition burden proof plead seems fair reasonable. Schlemmer Buffalo, R. P.R. 1907, 205 1, 10, 27 407, 408, 51 681. Agreeing, court met primarily singling offerings. once seen turns knowledge offerees, issuer's motives, laudable be, fade into irrelevance. focus inquiry protections registration. here disclose. obvious opportunities pressure advisable entitled compliance 5. 13 Reversed. 14 CHIEF JUSTICE BURTON dissent. 15 JACKSON took consideration decision case. 77, amended, U.S.C. 77d, U.S.C.A. 77d. 'Sec. (a) Unless statement effect security, shall unlawful person, directly indirectly— '(1) instruments transportation communication interstate commerce mails sell buy security medium prospectus otherwise; '(2) carry cause carried commerce, transportation, delivery sale. *' 77e, 77e. D.C.E.D.Mo.1952, 102 F.Supp. 964. 1952, 200 85. '* bill affect beyond prevent recurrences demonstrated abuses.' 7. somewhat different tenor, report spoke unless underwriter permit specific isolated insisting if generally purview Act.' 15, 16. subsequent reference oblique Managers Report: 'Sales become subject small constitute H.R.Rep.No. 152, 25. Nash Lynde, (1929) A.C. 158; re South England Natural Gas Petroleum Ltd., (1911) Ch. 573; cf. Sherwell Combined Incandescent Mantles Syndicate, 23 T.L.R. 482, 1907. See 80 Sol.J. 785, 1936. People Montague, 1937, 280 Mich. 610, 274 N.W. 347; Leach, 1932, 215 Cal. 536, P.2d 3; Mary Pickford Co. Bayly Bros., Cal.App., 68 239, modified, 1939, Cal.2d 501, 86 102. pages 968, 969. page 91. A. C. Frost Coeur D'Alene Corp., 1941, 312 38, 40, 61 414, 415, 85 words preamble helpful: 'An provide character foreign mails, frauds thereof, purposes.' 74. Viscount Summer's frequently quoted dictum "The course general word. numbers prescribed. Anything infinity serve: perhaps even one, he intended series subscribers, makes proceedings needless himself subscribing whole.' 158, 169. factors stressed advisory rendered Commission's Counsel 1935. 'I also regard significant relationship offerees. Thus, size advantage. factor particularly important high subordinate enjoy.' Fed.Reg. 10952. weight views expressed conferees Senate debate. 78 Cong.Rec. 10181, 10182.

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