Every sale of a security must be registered or else it must be exempt from registration. Exemptions apply to most sales of securities that have already been sold by the issuing company, but not always. Exemptions also apply to sales of securities directly by the issuing company to the initial shareholder, but these exemptions usually do not apply to large offerings.

Anyone who sells securities must also be registered under the broker/dealer rules or find an exemption from registration. The same is true for anyone who gives advice as to securities. They must be registered as investment advisers or find an exemption.

When an investor purchases a security and the registration provisions have not been complied with the investor often has a right to rescind the transaction or to hold the unregistered party liable for damages, if any are due to the failure to register.

Whether or not a security or its sale or a person selling it or advising as to it is registered is not relevant when it comes to the anti-fraud rules.

These apply to all securities transactions and generally require disclosure of all material facts.

Donald M. Thompson * 55 W. Monroe #3950; Chicago, IL 60603
Ph: 312-782-0844 * Fax: 312-201-1436 * Email: donthompsonlaw@sbcglobal.net