Legal Definition of Public Offering
In addition to requiring the filing of a registration statement, the Securities Act of 1933 makes it unlawful to mail or transmit in interstate commerce any security for the purpose of sale or delivery unless it is preceded or accompanied by a prospectus (a written statement of information about the public offering) that fully discloses all material facts regarding the investment, including the financial status of the enterprise. Material facts are those that are necessary to enable a purchaser to weigh the advantages and disadvantages of the investment. The balance sheet contained in the prospectus must accurately reflect the financial status of the issuing company and should include its assets and liabilities.
Unless a company files a registration statement that is then approved by the commission, it cannot legally make the public offering. Registration of the securities does not imply that the commission has approved the issue or that it has found the registration disclosures to be accurate. It does mean that persons filing false or incomplete information with the commission subject themselves to the risk of fine or imprisonment or both. Additionally, those persons connected with making a false or incomplete registration statement or prospectus may be liable for damages to purchasers of the securities.
Key words does not imply that the commission has approved the disclosures to be accurate.
Intrastate securities (those not publicly offered in interstate commerce) are governed by the laws of the state in which the stock is traded. State control of intrastate securities traffic does not conflict with federal regulation of interstate transactions. Most states have enacted blue sky laws, which regulate public offerings in a manner similar to federal securities legislation. These state laws get their name from their attempt to stop the sale of stock in fraudulent and speculative enterprises that have nothing to offer but blue sky. Many states require registration of securities before a public offering can be made. If the business seems likely to commit fraudulent acts involving prospective purchasers of its securities, state registration will be denied, and the public offering will not be allowed to go forward.
In addition to requiring the filing of a registration statement, the Securities Act of 1933 makes it unlawful to mail or transmit in interstate commerce any security for the purpose of sale or delivery unless it is preceded or accompanied by a prospectus (a written statement of information about the public offering) that fully discloses all material facts regarding the investment, including the financial status of the enterprise. Material facts are those that are necessary to enable a purchaser to weigh the advantages and disadvantages of the investment. The balance sheet contained in the prospectus must accurately reflect the financial status of the issuing company and should include its assets and liabilities.
Unless a company files a registration statement that is then approved by the commission, it cannot legally make the public offering. Registration of the securities does not imply that the commission has approved the issue or that it has found the registration disclosures to be accurate. It does mean that persons filing false or incomplete information with the commission subject themselves to the risk of fine or imprisonment or both. Additionally, those persons connected with making a false or incomplete registration statement or prospectus may be liable for damages to purchasers of the securities.
Key words does not imply that the commission has approved the disclosures to be accurate.
Intrastate securities (those not publicly offered in interstate commerce) are governed by the laws of the state in which the stock is traded. State control of intrastate securities traffic does not conflict with federal regulation of interstate transactions. Most states have enacted blue sky laws, which regulate public offerings in a manner similar to federal securities legislation. These state laws get their name from their attempt to stop the sale of stock in fraudulent and speculative enterprises that have nothing to offer but blue sky. Many states require registration of securities before a public offering can be made. If the business seems likely to commit fraudulent acts involving prospective purchasers of its securities, state registration will be denied, and the public offering will not be allowed to go forward.
