Author Question: Why is the definition of securities so broad? Can anything be excluded from that ... (Read 114 times)

OSWALD · **on:** Jun 24, 2018

Why is the definition of securities so broad? Can anything be excluded from that definition?

Question 2

Betty Furnish owns a consignment furniture business that she wishes to expand to several other cities. She does need capital to be able to do so and needs to raise 1 million. Betty says she cannot afford a full SEC registration. Can you offer Betty some suggestions for raising the capital?

mcabuhat · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

The definition is broad to be as encompassing as possible to try to protect investors in as many ways from as many different people as possible. Recently, the U.S. Supreme Court has excluded only an employer pension plan in which employees are not required to make contributions from the definition of securities.

Answer to Question 2

Betty could try an intrastate offering if her business will remain in one state. She could also try a short-form registration. Or she could try Regulation D. Rule 504 fits if she registers the offering in her state. If she wants to limit investors, she could try a 505 or 506 offering. She has several options and need not do a full-blown SEC registration.