A Security Is Sold to the Public Under a Private

question 398

Multiple Choice

A security is sold to the public under a private placement exemption. Later a suit is filed under the federal securities law claiming securities fraud. This suit will:

• A) fail since the security is not subject to the federal law since it was sold under an exemption
• B) fail since the security is not subject to the federal law since it was sold under an exemption⎯unless there were subsequent financial disclosures to the SEC
• C) fail since the security is not subject to the federal law since it was sold under an exemption⎯unless a private common law fraud suit has already prevailed
• D) be allowed only if there was a blue sky law violation
• E) none of the other choices