Langley Brothers, Inc., a corporation incorporated and doing business in Kansas,

Question

Langley Brothers, Inc., a corporation incorporated and doing business in Kansas, decides to sell no par
common stock worth $1 million to the public. The stock will be sold only within the state of Kansas.
Joseph Langley, the chairman of the board, says the offering need not be registered with the Securities
and Exchange Commission. His brother, Harry, disagrees. Who is right? Explain.
In responding to the question be sure to:
? Discuss the exempt securities pursuant to the Securities and Exchange Act.
? Determine whether or not Langley Brothers would be subject to registration requirements.

Explanation / Answer

Typically, when a security is offered publically, it must be registered with the SEC. However, common exemptions include:
Private offerings to a limited number of persons or institutions;
Offerings of limited size (under $1 million);
Intrastate offerings; and
Securities of municipal, state, and federal governments.

So in this case, Joseph is correct. The securities do not need to be registered.

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