The Simpson Investment Company (Simpson) was a corporation organized and incorpo

Question

The Simpson Investment Company (Simpson) was a corporation organized and incorporated in the state of Minnesota. The principal and only place of business from which the company conducted operations was Springfield, Minnesota. More than 80 percent of the company’s assets were located in Minnesota, and more than 80 percent of its income was derived from Minnesota. Simpson sold securities to Minnesota residents only. The proceeds from the sale were used entirely to make loans and other investments in real estate and other assets located outside the state of Minnesota. The company did not file a registration statement with the SEC.

Does this offering qualify for an intrastate offering exemption from registration? Explain.

Explanation / Answer

No, this offering doe not qualify for an intrastate offering exemption from registration. A company which is selling securities in any state in the US must file a registration statement with the Securities and Exchange Commission (SEC) which is a government body that regulates the securities market in the US and protects the investors. The Simpson Investment Company (Simpson) cannot invest in real estate and other assets located outside the state of Minnesota and cannot offer loans to Minnesota citizens since the money is from the sale of securities and the company is not complying with SEC regulation of registration with the body.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.