Texas Wesleyan Law Review


Monte F. James

Document Type



Recently due to the robust economy, the United States, including Texas, saw a significant increase in the number of initial public offerings ("IPOs") in the securities markets. Nationally, $1.16 trillion worth of new debt and equity IPOs were brought to market in 1993. Yet, 1994 saw a decrease in new IPOs due mainly to rising interest rates. In 1994, there was only $709.8 billion worth of IPOs brought to market in the U.S. The purpose of this article is to give direction to the business practitioner who unintentionally becomes involved in federal or state securities regulations. In Texas, a common involvement arises when a lawyer assists with the formation of a new business venture. A frequent misconception is if the deal is small enough, or if only a limited number of investors are involved, then federal and state securities laws are not invoked. This article will address those securities not requiring the filing of a registration statement with the Securities and Exchange Commission ("SEC") or the State Securities Board of the State of Texas ("State Securities Board"). The Securities Act of 19333 and the Securities Exchange Act of 19344 were enacted "to eliminate serious abuses in a largely unregulated securities market."' To achieve this goal, Congress "painted with a broad brush" in defining which activities invoked federal securities laws.



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