Dakota Gasworks Case Summary
BButler_BusinessLaw_Unit9_1
Blaine Butler
Kaplan University
BButler_BusinessLaw_Unit9_1
Dale Emerson served as the chief financial officer for Reliant Electric Company, a distributor of electricity serving portions of Montana and North Dakota. Reliant was in the final stages of planning a takeover of Dakota Gasworks, Inc. a natural gas distributor that operated solely within North Dakota. Emerson went on a weekend fishing trip with his uncle, Ernest Wallace.
Emerson mentioned to Wallace that he had been putting in a lot of extra hours at the office planning a takeover of Dakota Gasworks. On returning from the fishing trip, Wallace met with a broker from Chambers Investments and purchased $20,000 of Reliant stock. Three weeks later, Reliant made a tender offer to Dakota Gasworks stockholders and purchased …show more content…
Would registration with the SEC be required for Dakota Gasworks securities?
In this case I am assuming that Dakota Gasworks had already filed their initial registration with the SEC prior to offering stock to the public. In relation to the purchase of the company’s stock by Reliant, registration would not be necessary because Dakota Gasworks is not offering the stock for sale to the public. “Section 5 of the Securities Act of 1933 broadly provides that unless a security qualifies for an exemption, that security must be registered before it is offered to the public”(Miller & Jentz, 2010, p. 567)
2. Did Emerson violate Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5?
Technically Emerson did not violate these rules and would not be charged with anything if his uncle had not used information that he learned in casual conversation to purchase the stocks. However since his uncle did use the information in an illegal way the assumption of the prosecution will be that he did in fact violate the rules by giving a relative inside information about an upcoming securities
Blaine Butler
Kaplan University
BButler_BusinessLaw_Unit9_1
Dale Emerson served as the chief financial officer for Reliant Electric Company, a distributor of electricity serving portions of Montana and North Dakota. Reliant was in the final stages of planning a takeover of Dakota Gasworks, Inc. a natural gas distributor that operated solely within North Dakota. Emerson went on a weekend fishing trip with his uncle, Ernest Wallace.
Emerson mentioned to Wallace that he had been putting in a lot of extra hours at the office planning a takeover of Dakota Gasworks. On returning from the fishing trip, Wallace met with a broker from Chambers Investments and purchased $20,000 of Reliant stock. Three weeks later, Reliant made a tender offer to Dakota Gasworks stockholders and purchased …show more content…
Would registration with the SEC be required for Dakota Gasworks securities?
In this case I am assuming that Dakota Gasworks had already filed their initial registration with the SEC prior to offering stock to the public. In relation to the purchase of the company’s stock by Reliant, registration would not be necessary because Dakota Gasworks is not offering the stock for sale to the public. “Section 5 of the Securities Act of 1933 broadly provides that unless a security qualifies for an exemption, that security must be registered before it is offered to the public”(Miller & Jentz, 2010, p. 567)
2. Did Emerson violate Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5?
Technically Emerson did not violate these rules and would not be charged with anything if his uncle had not used information that he learned in casual conversation to purchase the stocks. However since his uncle did use the information in an illegal way the assumption of the prosecution will be that he did in fact violate the rules by giving a relative inside information about an upcoming securities