US-CN Companies & Securities Law Assignment

 Fraud in Connection with the Purchase or Sale of Securities The principal tool for promoting the informational integrity of securities transactions is Rule 10b-5. Scienter The Supreme Court held in Ernst & Ernst v. Hochfelder, that private actions under Rule 10b-5 must show that the defendant acted with scienter in order to succeed. Fraud elements of private 10b-5 actions Although neither §10(b) nor Rule 10b-5 specifies the elements a plaintiff must show to be entitled to relief, the Supreme Court has understood a 10b-5 action to bear a strong resemblance to its forbearer—old-fashioned common law deceit. The plaintiff has the burden of showing the following elements Material misinformation The defendant affirmatively misrepresented a material fact, or omitted a material fact that made his statement misleading, or remained silent on the face of a fiduciary duty to disclosure a material fact. Scienter The defendant knew (or was reckless in not knowing) the...

US Securities Exempt Transactions The exemptions fall into two classes. Transaction exemptions provide an exemption only from the registration provisions of Section 5 of the 1933 Securities Act. Securities placed under one of these exemptions remain subject to both the Securities Act and the Exchange Act and, importantly, cannot be resold unless either they are registered or another exemption is available. Exempt securities, on the other hand, need not be registered, but also may be resold free of registration burdens. Determining that a security is exempt, however, does not negate application of the securities acts in their entirety, for exempt securities remain subject to the antifraud provisions of the Securities Act and the Exchange Act. The 2012 Jumpstart Our Business Startups Act (JOBS Act) expanded SEC exempting authority through a new Section 3(b)(2) directing SEC to develop a new exemption for offerings not exceeding an aggregate offering amount of 50 million. Privat...