CITE

    15 USC Sec. 77b                                             01/08/2008

EXPCITE

    TITLE 15 - COMMERCE AND TRADE
    CHAPTER 2A - SECURITIES AND TRUST INDENTURES
    SUBCHAPTER I - DOMESTIC SECURITIES

HEAD

    Sec. 77b. Definitions; promotion of efficiency, competition, and
      capital formation

STATUTE

    (a) Definitions
      When used in this subchapter, unless the context otherwise
    requires -
        (1) The term "security" means any note, stock, treasury stock,
      security future, bond, debenture, evidence of indebtedness,
      certificate of interest or participation in any profit-sharing
      agreement, collateral-trust certificate, preorganization
      certificate or subscription, transferable share, investment
      contract, voting-trust certificate, certificate of deposit for a
      security, fractional undivided interest in oil, gas, or other
      mineral rights, any put, call, straddle, option, or privilege on
      any security, certificate of deposit, or group or index of
      securities (including any interest therein or based on the value
      thereof), or any put, call, straddle, option, or privilege
      entered into on a national securities exchange relating to
      foreign currency, or, in general, any interest or instrument
      commonly known as a "security", or any certificate of interest or
      participation in, temporary or interim certificate for, receipt
      for, guarantee of, or warrant or right to subscribe to or
      purchase, any of the foregoing.
        (2) The term "person" means an individual, a corporation, a
      partnership, an association, a joint-stock company, a trust, any
      unincorporated organization, or a government or political
      subdivision thereof. As used in this paragraph the term "trust"
      shall include only a trust where the interest or interests of the
      beneficiary or beneficiaries are evidenced by a security.
        (3) The term "sale" or "sell" shall include every contract of
      sale or disposition of a security or interest in a security, for
      value. The term "offer to sell", "offer for sale", or "offer"
      shall include every attempt or offer to dispose of, or
      solicitation of an offer to buy, a security or interest in a
      security, for value. The terms defined in this paragraph and the
      term "offer to buy" as used in subsection (c) of section 77e of
      this title shall not include preliminary negotiations or
      agreements between an issuer (or any person directly or
      indirectly controlling or controlled by an issuer, or under
      direct or indirect common control with an issuer) and any
      underwriter or among underwriters who are or are to be in privity
      of contract with an issuer (or any person directly or indirectly
      controlling or controlled by an issuer, or under direct or
      indirect common control with an issuer). Any security given or
      delivered with, or as a bonus on account of, any purchase of
      securities or any other thing, shall be conclusively presumed to
      constitute a part of the subject of such purchase and to have
      been offered and sold for value. The issue or transfer of a right
      or privilege, when originally issued or transferred with a
      security, giving the holder of such security the right to convert
      such security into another security of the same issuer or of
      another person, or giving a right to subscribe to another
      security of the same issuer or of another person, which right
      cannot be exercised until some future date, shall not be deemed
      to be an offer or sale of such other security; but the issue or
      transfer of such other security upon the exercise of such right
      of conversion or subscription shall be deemed a sale of such
      other security. Any offer or sale of a security futures product
      by or on behalf of the issuer of the securities underlying the
      security futures product, an affiliate of the issuer, or an
      underwriter, shall constitute a contract for sale of, sale of,
      offer for sale, or offer to sell the underlying securities.
        (4) The term "issuer" means every person who issues or proposes
      to issue any security; except that with respect to certificates
      of deposit, voting-trust certificates, or collateral-trust
      certificates, or with respect to certificates of interest or
      shares in an unincorporated investment trust not having a board
      of directors (or persons performing similar functions) or of the
      fixed, restricted management, or unit type, the term "issuer"
      means the person or persons performing the acts and assuming the
      duties of depositor or manager pursuant to the provisions of the
      trust or other agreement or instrument under which such
      securities are issued; except that in the case of an
      unincorporated association which provides by its articles for
      limited liability of any or all of its members, or in the case of
      a trust, committee, or other legal entity, the trustees or
      members thereof shall not be individually liable as issuers of
      any security issued by the association, trust, committee, or
      other legal entity; except that with respect to equipment-trust
      certificates or like securities, the term "issuer" means the
      person by whom the equipment or property is or is to be used; and
      except that with respect to fractional undivided interests in
      oil, gas, or other mineral rights, the term "issuer" means the
      owner of any such right or of any interest in such right (whether
      whole or fractional) who creates fractional interests therein for
      the purpose of public offering.
        (5) The term "Commission" means the Securities and Exchange
      Commission.
        (6) The term "Territory" means Puerto Rico, the Virgin Islands,
      and the insular possessions of the United States.
        (7) The term "interstate commerce" means trade or commerce in
      securities or any transportation or communication relating
      thereto among the several States or between the District of
      Columbia or any Territory of the United States and any State or
      other Territory, or between any foreign country and any State,
      Territory, or the District of Columbia, or within the District of
      Columbia.
        (8) The term "registration statement" means the statement
      provided for in section 77f of this title, and includes any
      amendment thereto and any report, document, or memorandum filed
      as part of such statement or incorporated therein by reference.
        (9) The term "write" or "written" shall include printed,
      lithographed, or any means of graphic communication.
        (10) The term "prospectus" means any prospectus, notice,
      circular, advertisement, letter, or communication, written or by
      radio or television, which offers any security for sale or
      confirms the sale of any security; except that (a) a
      communication sent or given after the effective date of the
      registration statement (other than a prospectus permitted under
      subsection (b) of section 77j of this title) shall not be deemed
      a prospectus if it is proved that prior to or at the same time
      with such communication a written prospectus meeting the
      requirements of subsection (a) of section 77j of this title at
      the time of (!1) such communication was sent or given to the
      person to whom the communication was made, and (b) a notice,
      circular, advertisement, letter, or communication in respect of a
      security shall not be deemed to be a prospectus if it states from
      whom a written prospectus meeting the requirements of section 77j
      of this title may be obtained and, in addition, does no more than
      identify the security, state the price thereof, state by whom
      orders will be executed, and contain such other information as
      the Commission, by rules or regulations deemed necessary or
      appropriate in the public interest and for the protection of
      investors, and subject to such terms and conditions as may be
      prescribed therein, may permit.
        (11) The term "underwriter" means any person who has purchased
      from an issuer with a view to, or offers or sells for an issuer
      in connection with, the distribution of any security, or
      participates or has a direct or indirect participation in any
      such undertaking, or participates or has a participation in the
      direct or indirect underwriting of any such undertaking; but such
      term shall not include a person whose interest is limited to a
      commission from an underwriter or dealer not in excess of the
      usual and customary distributors' or sellers' commission. As used
      in this paragraph the term "issuer" shall include, in addition to
      an issuer, any person directly or indirectly controlling or
      controlled by the issuer, or any person under direct or indirect
      common control with the issuer.
        (12) The term "dealer" means any person who engages either for
      all or part of his time, directly or indirectly, as agent,
      broker, or principal, in the business of offering, buying,
      selling, or otherwise dealing or trading in securities issued by
      another person.
        (13) The term "insurance company" means a company which is
      organized as an insurance company, whose primary and predominant
      business activity is the writing of insurance or the reinsuring
      of risks underwritten by insurance companies, and which is
      subject to supervision by the insurance commissioner, or a
      similar official or agency, of a State or territory or the
      District of Columbia; or any receiver or similar official or any
      liquidating agent for such company, in his capacity as such.
        (14) The term "separate account" means an account established
      and maintained by an insurance company pursuant to the laws of
      any State or territory of the United States, the District of
      Columbia, or of Canada or any province thereof, under which
      income, gains and losses, whether or not realized, from assets
      allocated to such account, are, in accordance with the applicable
      contract, credited to or charged against such account without
      regard to other income, gains, or losses of the insurance
      company.
        (15) The term "accredited investor" shall mean -
          (i) a bank as defined in section 77c(a)(2) of this title
        whether acting in its individual or fiduciary capacity; an
        insurance company as defined in paragraph (13) of this
        subsection; an investment company registered under the
        Investment Company Act of 1940 [15 U.S.C. 80a-1 et seq.] or a
        business development company as defined in section 2(a)(48) of
        that Act [15 U.S.C. 80a-2(a)(48)]; a Small Business Investment
        Company licensed by the Small Business Administration; or an
        employee benefit plan, including an individual retirement
        account, which is subject to the provisions of the Employee
        Retirement Income Security Act of 1974 [29 U.S.C. 1001 et
        seq.], if the investment decision is made by a plan fiduciary,
        as defined in section 3(21) of such Act [29 U.S.C. 1002(21)],
        which is either a bank, insurance company, or registered
        investment adviser; or
          (ii) any person who, on the basis of such factors as
        financial sophistication, net worth, knowledge, and experience
        in financial matters, or amount of assets under management
        qualifies as an accredited investor under rules and regulations
        which the Commission shall prescribe.
        (16) The terms "security future", "narrow-based security
      index", and "security futures product" have the same meanings as
      provided in section 78c(a)(55) of this title.
    (b) Consideration of promotion of efficiency, competition, and
      capital formation
      Whenever pursuant to this subchapter the Commission is engaged in
    rulemaking and is required to consider or determine whether an
    action is necessary or appropriate in the public interest, the
    Commission shall also consider, in addition to the protection of
    investors, whether the action will promote efficiency, competition,
    and capital formation.

SOURCE

    (May 27, 1933, ch. 38, title I, Sec. 2, 48 Stat. 74; June 6, 1934,
    ch. 404, title II, Sec. 201, 48 Stat. 905; Aug. 10, 1954, ch. 667,
    title I, Secs. 1-4, 68 Stat. 683, 684; Pub. L. 86-70, Sec. 12(a),
    June 25, 1959, 73 Stat. 143; Pub. L. 86-624, Sec. 7(a), July 12,
    1960, 74 Stat. 412; Pub. L. 91-547, Sec. 27(a), Dec. 14, 1970, 84
    Stat. 1433; Pub. L. 96-477, title VI, Sec. 603, Oct. 21, 1980, 94
    Stat. 2294; Pub. L. 97-303, Sec. 1, Oct. 13, 1982, 96 Stat. 1409;
    Pub. L. 100-181, title II, Secs. 201, 202, Dec. 4, 1987, 101 Stat.
    1252; Pub. L. 104-290, title I, Sec. 106(a), Oct. 11, 1996, 110
    Stat. 3424; Pub. L. 105-353, title III, Sec. 301(a)(1), Nov. 3,
    1998, 112 Stat. 3235; Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    208(a)(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A-434.)

REFERENCES IN TEXT

      The Investment Company Act of 1940, referred to in subsec.
    (a)(15)(i), is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789,
    as amended, which is classified generally to subchapter I (Sec. 80a-
    1 et seq.) of chapter 2D of this title. For complete
    classification of this Act to the Code, see section 80a-51 of this
    title and Tables.
      The Employee Retirement Income Security Act of 1974, referred to
    in subsec. (a)(15)(i), is Pub. L. 93-406, Sept. 2, 1974, 88 Stat.
    829, as amended, which is classified principally to chapter 18
    (Sec. 1001 et seq.) of Title 29, Labor. For complete classification
    of this Act to the Code, see Short Title note set out under section
    1001 of Title 29 and Tables.

CODIFICATION

      Words "Philippine Islands" deleted from definition of term
    "Territory" under authority of Proc. No. 2695, eff. July 4, 1946,
    11 F.R. 7517, 60 Stat. 1352, which granted independence to the
    Philippine Islands. Proc. No. 2695 was issued pursuant to section
    1394 of Title 22, Foreign Relations and Intercourse, and is set out
    as a note under that section.

AMENDMENTS

      2000 - Subsec. (a)(1). Pub. L. 106-554, Sec. 1(a)(5) [title II,
    Sec. 208(a)(1)(A)], inserted "security future," after "treasury
    stock,".
      Subsec. (a)(3). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    208(a)(1)(B)], inserted at end "Any offer or sale of a security
    futures product by or on behalf of the issuer of the securities
    underlying the security futures product, an affiliate of the
    issuer, or an underwriter, shall constitute a contract for sale of,
    sale of, offer for sale, or offer to sell the underlying
    securities."
      Subsec. (a)(16). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
    208(a)(1)(C)], added par. (16).
      1998 - Subsec. (a)(15)(i). Pub. L. 105-353 made technical
    amendment to reference in original act which appears in text as
    reference to section 77c(a)(2) of this title and inserted "of this
    subsection" after "paragraph (13)".
      1996 - Pub. L. 104-290 designated existing provisions as subsec.
    (a), inserted heading, and added subsec. (b).
      1987 - Par. (5). Pub. L. 100-181, Sec. 201, substituted
    "Securities and Exchange Commission" for "Federal Trade
    Commission".
      Par. (6). Pub. L. 100-181, Sec. 202, struck out reference to
    Canal Zone.
      1982 - Par. (1). Pub. L. 97-303 inserted "any put, call,
    straddle, option, or privilege on any security, certificate of
    deposit, or group or index of securities (including any interest
    therein or based on the value thereof), or any put, call, straddle,
    option, or privilege entered into on a national securities exchange
    relating to foreign currency," after "mineral rights,".
      1980 - Par. (15). Pub. L. 96-477 added par. (15).
      1970 - Pars. (13), (14). Pub. L. 91-547 added pars. (13) and
    (14).
      1960 - Par. (6). Pub. L. 86-624 struck out reference to Hawaii.
      1959 - Par. (6). Pub. L. 86-70 struck out reference to Alaska.
      1954 - Act Aug. 10, 1954, in pars. (3), (8), (10), and (11),
    redefined term "sale" so as to distinguish between "offers" and
    "sales", clarified definition of "registration statement", and
    conformed definition of "prospectus" to changes made by act Aug.
    10, 1954, to sections 77e and 77j of this title.
      1934 - Act June 6, 1934, amended pars. (1), (4), and (10).
                     EFFECTIVE DATE OF 1970 AMENDMENT
      Amendment by Pub. L. 91-547 effective Dec. 14, 1970, see section
    30 of Pub. L. 91-547, set out as a note under section 80a-52 of
    this title.
                     EFFECTIVE DATE OF 1954 AMENDMENT
      Section 501 of act Aug. 10, 1954, provided that: "This Act
    [amending this section and sections 77c to 77e, 77j, 77l, 77q, 77v,
    77ccc to 77fff, 77xxx, 78k, 78l, 80a-2 and 80a-24 of this title]
    shall take effect sixty days after the date of its enactment [Aug.
    10, 1954]."

TRANSFER OF FUNCTIONS

      For transfer of functions of Securities and Exchange Commission,
    with certain exceptions, to Chairman of such Commission, see Reorg.
    Plan No. 10 of 1950, Secs. 1, 2, eff. May 24, 1950, 15 F.R. 3175,
    64 Stat. 1265, set out under section 78d of this title.

FOOTNOTE

    (!1) So in original.