ASSIGNMENT
1. Acme Realty, a real estate development company, is alimited partnership organized in Georgia. It is planning to develop a two-hundred-acre parcel of land for a regional shopping center and needs to raise $1,250,000. As part of its financing, Acme plans to offer $1,250,000 worth of limited partnership interests to about one hundred prospective investors in the southeastern United States. It anticipates that about forty to fifty private investors will purchase the limited partnership interests.
a. Must Acme register this offering? Why or why not?
b. If Acme must register but fails to do so, what are the legal consequences?
2. Bigelow Corporation has total assets of $850,000; sales of $1,350,000; and one class of common stock with 375 shareholders and a class of preferred stock with 250 shareholders, both of which are traded over the counter. Which provisions of the Securities Exchange Act of 1934 apply to Bigelow Corporation?
3. Capricorn, Inc., is planning to “go public” by offering its common stock, which previously had been owned by only three shareholders. The company intends to limit the number of purchasers to twenty-five persons residing in the State of its incorporation. All of Capricorn’s business and all of its assets are located in its State of incorporation. Based upon these facts, what exemptions from registration, if any, are available to Capricorn, and what conditions would each of these available exemptions impose upon the terms of the offer?
4. The boards of directors of DuMont Corp. and Epsot, Inc., agreed to enter into a friendly merger, with DuMont to be the surviving entity. The stock of both corporations was listed on a national stock exchange. In connection with the merger, both corporations distributed to their shareholders proxy statements seeking approval of the proposed merger. The shareholders of both corporations voted to approve the merger. About three weeks after the merger was consummated, the price of DuMont stock fell from $25 to $13 as a result of the discovery that Epsot had entered into several unprofitable long-term contracts two months before the merger had been proposed. The contracts will result in substantial losses from Epsot’s operations for at least the next four years. The existence and effect of these contracts, although known to both corporations at the time of the proposed merger, were not disclosed in the proxy statements of either corporation. Can the shareholders of DuMont recover in a suit against DuMont under the 1934 Act? Explain.
5. Farthing is a director and vice president of Garp, Inc., whose common stock is listed on the New York Stock Exchange. Farthing engaged in the following transactions in the same calendar year: on January 1, Farthing sold five hundred shares at $30 per share; on January 15, she purchased three hundred shares at $30 per share; on February 1, she purchased two hundred shares at $45 per share; on March 1, she purchased three hundred shares at $60 per share; on March 15, she sold two hundred shares at $55 per share; and on April 1, she sold one hundred shares at $40 per share. Howell brings suit on behalf of Garp, alleging that Farthing has violated the Securities Exchange Act of 1934. Farthing defends on the ground that she lost money on the transactions in question. Is Farthing liable? If so, under which provi- sions and for what amount of money?
