State regulation o Many large states don’t follow it, many amend Uniform Securities Act, lack of uniformity International Implications o To encourage foreign issuers to raise equity in American markets, in 1990 the SEC added a foreign exemption—Regulation S. exemption only from registration, not from antifraud rules 47
Requirements o The sale must be an off-shore transaction, defined as one in which no offer is made to a person in the United States, and either: (1) at the time the buy order is originated the buyer is outside the United States or (2) the transaction is executed through the facilities of a designated offshore securities market. There can be no “directed selling efforts” in the United States. Sarbanes- Oxley required insiders to begin o Private suit Time Constraint/Passage of time: What if contract doesn’t say how long you have to decide you will use reasonable person standard to decide who was wrong and right. If there was no time stated, we can use the reasonable person standard to decide what to do—is there urgent language used in the contract? Was there speed in the way the offer was sent? (overnight mailing, regular shipping) What is reasonable length of time Does offer appear to have sense of urgency to it in way it is written Does it have term in time frame, most recent quarterly earnings. Type and speed of communication media. Contract sent by mail or expedited mail. The one that is sent by regular mail, communicates that the speed is not that important they can spend extra time to think about it The market of offer: which contract would be on table longest, contract for stalk, buy car, or buy and island. The buying market for island is not going to change that fast. Subject of the offer—if the subject is stock (changes on a second to second basis) or about a used car (probably won't change for a while) Past business relationship: hey we have done contracts before, if you are reliable and usually go 4-6 weeks, your offer is for 6 months. Provide acceptance the same way you received it. You receive overnight send back overnight. Time Delay Traps: Heavily consider short term consequence and heavily ignore long term consequences Example: Having one more shot of tequila at the moment is a grand idea but you ignore the long-term consequences such as hangovers, throwing up, etc. Short term & long term consequences Example: cheating on a test, J&J case Reason why companies end up in tax evasion The Wall Street Guy Many financial specialists are bad we can’t jump to conclusions an assume they are unethical Assuming good/bad before actually getting to know them Tort: Tort: a wrongful act or infringement of a right that subjects the violator to civil legal liability o Example: Medical malpractice o Negligence: Neglecting an interest or duty through carelessness o Prima Facie Case: Defendant owed plaintiff a duty of care Is it foreseeable that someone could be harmed?
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- Spring '08