SEC v. Ralston Purina Co.

346 U.S. 119 (1953)


Since 1911, Ralston Purina (D) encouraged stock ownership among its employees. In 1942, it made authorized, but unissued, common stock available to some of them. Between 1947-1951, nearly $2 million of unregistered stock was sold to employees who were interested and took the initiative to request a stock purchase. D made use of the U.S. mails to execute this program. A corporate resolution authorized the sale of common stock 'to employees . . . who shall, without any solicitation by the Company or its officers or employees, inquire of any of them as to how to purchase common stock of Ralston Purina Company.' These employees ranged from an artist, electrician, and mill office clerk to the copywriter, order credit trainee, and veterinarian. The S.E.C. (P) brought a complaint under the Securities Act of 1933 as it claimed they were unregistered offerings. D claimed it fell under § 4 (1)'s private offering exemption in that all of the offerees were 'key employees' in its organization and no public offering was made.