Will the offering need to be registered with the Securities and Exchange Commission (SEC) under the Securities Act of 1933?

Securities Law

Private University, a private nonprofit educational institution located in California, decides to issue “Shares in Learning” certificates in a one-time offering to the public. These shares will be sold for $500 each and entitle the bearer to redeem each certificate for two undergraduate or one graduate college credit in any of its schools at any time in the future. The shares may also be resold without restriction by the initial purchaser. The offering will be made via the Internet.

Will the offering need to be registered with the Securities and Exchange Commission (SEC) under the Securities Act of 1933? Explain. Does your answer differ if “Shares in Learning” are issued by Private College, a proprietary for-profit institution that does business in all 50 states? Why?

Guided Response: Respond to at least two of your fellow students’ posts in a substantive manner. Some ways to do this include the following, though you may choose a different approach, providing your response is substantive:

Agree or disagree with your classmate’s post. Posit facts that might change the outcome of the analysis.

Respond to Gregory Robinson post

Will the offering need to be registered with the Securities and Exchange Commission (SEC) under the Securities Act of 1933? Explain. Does your answer differ if “Shares in Learning” are issued by Private College, a proprietary for-profit institution that does business in all 50 states? Why?

As a helpful note, The Securities and Exchange Commission (SEC) is a federal agency that oversees public sales of securities (Seaquist, 2012, 31.1). To answer the question if the offerings should be registered, they don’t have to be registered with the SEC.  According to Seaquist (2012), there’s a list of securities that are exempt from registration, such as bank securities, commercial paper, charitable or religious securities, saving and loans securities, common carrier securities, and even an insurance policy (31.1). Since Private University is a private nonprofit educational institution, those offerings do not have to be registered because it falls under the securities issued by nonprofit religious, charitable, educational, benevolent, or fraternal organizations. Additionally, it is noted that under Rule 147 of the SEC, securities offered for sale solely in one state by a company that does at least 80% of its business in the state are also exempt from filing (Seaquist, 2012, 31.1).

Private University’s “Sharing in Learning” is only a one-time offer so I would say my answer would stay the same, since its technically a donation to the public. If this institution were a proprietary, for-profit organization, it would differ, since it involves business operations in all 50 states. Referring to Rule 147, state securities regulations vary and may require a company to file/register with the SEC (Seaquist, 2012, 31.1). It is noted that Rule 504 of Regulation D states that “Nonpublic issuers may sell up to $1 million of securities in 12 months to any purchaser. Extensive advertising of the issue is permitted, as long as the dollar limit of the issue is not exceeded” (Seaquist, 2012, 31.1). Such regulations like this may help protect businesses and investors.

 

Reference

Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.

This text is a Constellation™ course digital materials (CDM) title.

Respond to Kathy Kim post

Private University is a nonprofit educational institution and would be exempt from registration. The Securities Act of 1933 provides an exemption from registration for securities issued by nonprofit religious, charitable, education, benevolent, or fraternal organizations (Seaquist, 2012). Since they are a nonprofit education institute, they have met this qualifier.

If Private University were a for-profit educational institution, then it does not qualify within the list under the Securities Act of 1933. There are additional qualifiers for exemption that may apply. Rule 147 indicates that they would be exempt if the securities were only offered within California, where it is located and established, and does 80% of its business within the state (Seaquist, 2012). Private University indicated that they would not restrict the securities to be resold by the initial purchaser. In order to stay exempt under Rule 147, Private University must restrict the resale to only California residents for the initial nine months (Seaquist, 2012). The Internet offering would need to be restricted to California residents.

Private University can also be exempt under Rule 504. The text states that private users selling only up to $1 million in securities during a 12-month period are exempt. When researching Rule 504 on the U.S. Securities and Exchange Commission website, Rule 504 has been updated since 2017 to a limit of $5 million (SEC, 2017). The time period of 12 months remains the same.

If Private University were to conduct business in all 50 states, then it would not qualify for an exemption since it is for-profit and is conducting business interstate rather than intrastate. Rule 504 may be the only qualifier they can claim for exemption for the latter scenario.

 

Seaquist, G. (2012).  Business law for managers  [Electronic version]. Retrieved from https://content.ashford.edu/

U.S. Securities and Exchange Commission. (2017). Rule 504 of Regulation D: A Small Entity Compliance Guide for Issuers[1]. Retrieved from https://www.sec.gov/divisions/corpfin/guidance/rule504-issuer-small-entity-compliance.html

Antitrust Law

Review the “AT&T Pulls $39 Billion T-Mobile Bid on Regulatory Opposition (Links to an external site.)” article.

In 2011, AT&T attempted a merger with T-Mobile. The Justice Department sued under the act, claiming that the merger would constitute a violation of the antitrust laws. In 2012, AT&T dropped its attempt at the acquisition.

If AT&T had merged with T-Mobile, would the merger have violated antitrust laws? Why, or why not? Do not be unduly influenced by the Justice Department’s stance on the issue. Use your own analysis to reach a conclusion.

Guided Response: Respond to at least two of your fellow students’ posts in a substantive manner. Some ways to do this include the following, though you may choose a different approach, providing your response is substantive:

Agree or disagree with your classmate’s position. Defend your position by using information from the week’s readings or examples from current events.

Respond to Mitchell Powell post

In 2011, if the merger between AT&T and T-Mobile would have gone through, it would have been a historically large deal and would have allowed them to pass Verizon as the number one provider for wireless networks and services. Antitrust laws are laws that are regulated by the federal government regarding anticompetitive practices that could end up affecting interstate commerce (Seaquist, 2012). Essentially, it is in the government’s best interest to encourage healthy competition in the economy to ensure that all companies have equal opportunity and that there is some motivation to provide quality products and services and give the general public the option to more freely choose. There are also certain laws against having monopolies which would consist of essentially one large entity controlling all of the commerce for a certain segment within the market. Although the merger between AT&T and T-Mobile might not classify them as a monopoly, it would definitely affect the way the market changes see as two power houses would join forces and drastically change the competitive landscape of the economy. 

If this merger would have gone through, there would have been a possibility of them breaking antitrust laws. Seeing as the pricing for wireless plans between the two companies was so different, they would likely have to increase their pricing which would negatively impact the competitive environment. If AT&T were to find a way to keep T-Mobile’s prices the way they currently are, there would be less of a risk of breaking antitrust laws. I think if they would have merged, they would have had a lot of potential to offer the general public a fairly quality and competitive product and service because they would have a large range of money, experience, and other resources. 

 

References

Seaquist, G. (2012). Business law for managers [Electronic version].

Respond to Rebecca Williams post

If AT&T had merged with T-Mobile, would the merger have violated antitrust laws? Why or why not?

I am of the opinion that the merger would not have violated antitrust laws.  This is because under the Sherman Antitrust Act the companies must be contracting or conspiring to destroy competition and regulate pricing (Seaquist, 2012).  While the price of T-Mobile services at the time were more expensive T-Mobile said that it would not raise the price of existing AT&T customers under their current plans.  Furthermore, there would still be other options for the consumers to choose from if they did not want to have T-Mobile as their mobile carrier.  I am also not convinced that T-Mobile was intending to destroy competition and create a monopoly.  This is an interesting issue to consider now in 2019 because while I did a bit of reading it is difficult for me to see how any mobile company would be able to create a monopoly.  Therefor it would have to be proven that these companies were in some agreement or arrangement to form a trust and restrict both trade and commerce among several states ability to have options between mobile carriers none of which I see proof of.  I could be naive, but I did not see how the antitrust laws would have been broken.  In addition, and again this is coming with the skewed point of view from 2019, it does not seem the rule of reason test which determines whether specific actions will arguably result in the restraint of trade would prove positive (Seaquist, 2012).

Thank you,

Rebecca

References:

Moritz, S. (2011, December 20).  AT&T Pulls $39 Billion T-Mobile Bid on RegulatoryOpposition (Links to an external site.) (Links to an external site.) . Deseret News. Retrieved from http://www.deseretnews.com/article/700208468/ATT-pulls-39-billion-T-Mobile-bid.html

Seaquist, G. (2012).  Business law for managers  [Electronic version]. Retrieved from

https://content.ashford.edu/

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