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What is an “offer” to sell securities?
The ’33 Act specifically regulates any offer to sell securities. The term “offer” is defined very broadly under the ’33 Act as any attempt to solicit interest in buying shares. The definition of an offer to sell securities goes far beyond actually attempting to sell securities. As such, securities law regulates a much wider range of conduct than many people anticipate.
• Note: Even if the communicator includes disclaimers or provisions stating that the information is not an offer and that the recipient cannot purchase securities at this time, the communication may still be considered an offer.
• Example: Under this definition, direct mail or advertisement of any sort would constitute an offer. Posting information about a securities offering on a website would be considered a solicitation of offers. Further, any communication that discloses information about the decision to sell securities, depending upon the context, may be considered an offer.
• Discussion: Why do you think an offer to sell securities is defined so broadly? Do you think it is appropriate or overly broad? Why?
• Practice Question: ABC Corp is considering raising money for operations by selling bonds to the public. ABC Corp wants to gauge public interest, and posts an announcement on a popular investment website stating the ABC Corp will be selling bonds at the end of the year. Does this activity implicate the securities laws?