Date of this Version
Federal securities law is in the midst of a revolution. Since 1933, the registration of securities offerings under the Securities Act of 19331 (the "Securities Act") and the exemptions from the registration requirement have rested on the elusive concept of "transaction." The transactional system has three foundational elements: (1) current registration of discrete offerings-- the idea that an issuer may register only discrete offerings of securities planned to be sold in the immediate future; (2) resale restrictions arising out of the underwriter concept-- the idea that securities acquired in an exempted offering are not freely resalable; and (3) the integration doctrine-- the idea that an entire offering, not individual offers and sales, must qualify for a single exemption from registration. That foundation is crumbling rapidly and the changes have not been uniform across all three elements of the system.
It is time to free the Securities Act registration exemptions from their transactional underpinnings. The integration doctrine and the complex system of metaphysics, safe harbors, and informal interpretations that keep the system (barely) alive should be abolished, and replaced with the weighted exemption system proposed in this Article. A weighted exemption system would fulfill all of the goals of the current system at a substantially lower cost to issuers, the SEC, and the investing public.