6 An insurance endowment or annuity contract issued by a state regulated

6 an insurance endowment or annuity contract issued

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6. An   insurance,   endowment,   or   annuity   contract   issued   by   a   state-regulated   insurance company. 7. Securities issued in a corporate reorganization in which one security is exchanged for another or in a bankruptcy proceeding. 8. Securities issued in stock dividends and stock splits. E NHANCING  Y OUR  L ECTURE W ILL  I NACCURATE  I NFORMATION   IN   AN  E LECTRONIC P ROSPECTUS  I NVALIDATE   THE  R EGISTRATION ?   Many companies now submit registration statements, prospectuses, and other information to the Securities and Exchange Commission (SEC) via the Internet.   The SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system then posts much of this information online to inform investors about   the   corporation,   the   security   being   sold,   and   the   risk   of   investing   in  that   security.     Some corporations also send investors a printed prospectus. Theoretically, a corporation should provide the same information in electronic form as it does in a printed prospectus, but practical difficulties can arise in transmitting digital information. T HE  P ROBLEM   WITH  G RAPHICS As anyone who is familiar with the Internet knows, the graphics, images, and audio files created by
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CHAPTER 41:  CORPORATIONS—SECURITIES LAW AND CORPORATE GOVERNANCE           41 one computer are not always readable by another computer when they are exchanged online.  The SEC has created Rule 304 to deal with this situation. a  The first part of the rule states that if graphic, image, or audio material in a prospectus cannot be reproduced in an electronic form on EDGAR, the electronic prospectus must include a fair and accurate narrative description of the omitted data. The second part of Rule 304 provides that the graphic, image, and audio material contained in the version of a document delivered to investors is  deemed to be part of the electronic document  filed with the SEC. As a result, a corporation can have two versions of a prospectus—a print version that contains graphics and an electronic version that describes the information shown in the graphics.  What if the summary describing the graphics in an electronic prospectus is inaccurate but the investors received an accurate print version?  That was the issue before a federal appellate court in  DeMaria v. Andersen . b T HE  E LECTRONIC  P ROSPECTUS  C ONTAINED  I NACCURACIES In anticipation of an initial public offering (IPO), ILife.com, Inc., filed a registration statement and a prospectus with the SEC via the EDGAR database.  ILife.com also distributed a printed version of the prospectus to the public. The printed prospectus contained a bar graph that provided historical financial
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  • Fall '09
  • Gough
  • Business Law, ........., U.S. Securities and Exchange Commission

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