Legal Memorandum: Exemption from Federal Securities Laws

Issue: When is a respondent entitled to claim exemption from federal securities laws for securities issued by state and local governments?

Area of Law: Corporate & Securities
Keywords: Federal securities laws; Exemption; Securities issued by state and local governments
Jurisdiction: Federal
Cited Cases: 147 F.3d 118; 12 F.3d 346; 513 F. Supp. 571
Cited Statutes: 15 U.S.C. § 77a et seq.; 15 U.S.C. § 77c(a)
Date: 04/01/2001

In Vigilant Insurance Co. of America v. Housing Authority, 637 N.Y.S.2d 342 (1995), an action was lodged against the issuing authority that alleged it had failed to pay the amounts due under the bonds.  Analyzing the statute of limitations arguments, the court took note of the basic premises underlying the ripeness of a cause of action.  The court explained that

a cause of action does not accrue until an injury is sustained.  An action accrues, then, when all of the facts necessary to sustain the cause of action have occurred, so that a party could obtain relief in court. . . . The accrual of an action “depends on a nice balancing of policy considerations”.  A defendant’s interest in defending a claim must be balanced with a plaintiff’s interest in not being deprived of a claim before a reasonable chance to assert it arises.

Id. at 346 (citations omitted).  In that case, the court determined that a cause of action on a bond did not accrue until the debt was “due and payable.” 

In Tabby’s International, Inc. v. Securities & Exchange Commission, 479 F.2d 1080 (5th Cir. 1973), a registration exemption was at issue.  While allowing that certain exemptions were provided to an offeror, the court explained that they would not extend the exemptions to protect the underwriter, noting

[t]he details of the underwriter’s activities and the respects in which they caused the offering circular to be false and misleading and resulted in […]


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