Corporations - Securities Act of 1933 - Stock Sale to Employees as a Public Offer

The Securities and Exchange Commission sued to enjoin defendant corporation from offering stock for sale to its employees without first complying with the registration requirements of the Securities Act of 1933. Defendant claimed that its offer was not a public offer and therefore it came under a class of transactions which were exempt from the registration requirements. The offer was made to about 500 of the company's 7,000 employees. The company classified the offer as one made only to ''key employees." The court of appeals affirmed the trial court's judgment for defendant.

On certiorari, held, reversed, two justices dissenting. In the absence of a showing that the employees to whom the stock was offered had knowledge making the protection of the act unnecessary, this was a public offer and therefore the registration requirements of the Securities Act of 1933 had to be fulfilled. Securities & Exchange Commission v. Ralston Purina Co., 346 U.S. 119, 73 S.Ct. 981 (1953).