Texas Attorney General Opinion: GA-0309 Page: 3 of 5
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The Honorable Carole Keeton Strayhom - Page 3
exempts "transactions by any person other than an issuer, underwriter, or dealer." Id. 77d(1); see
Request Letter, supra note 1, at 2. The term "person" is defined to include a government. See 15
U.S.C. 77b(a)(2) (2000). The terms "issuer," "underwriter," and "dealer" are defined:
* An issuer is a "person who issues or proposes to issue [a]
security." Id. 77b(a)(4).
* An underwriter is a "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." Id. 77b(a)(11);
see also id. 77b(a)(3) (defining "sale," "sell," "offer to sell,"
"offer for sale," and "offer").
* A dealer is a "person who engages . . as agent, broker, or
principal, in the business of offering, buying, selling, or
otherwise dealing or trading in securities issued by another
person." Id. 77b(a)(12).
You assume that the comptroller is not an issuer or a dealer, but may be an underwriter. See Request
Letter, supra note 1, at 2 ("the only relevant question is whether the Comptroller would be acting
as an underwriter in reselling the securities at issue here").
We question whether the comptroller could be considered an underwriter in the
circumstances you describe. As the term's definition suggests, an underwriter is "one who purchases
stock from [an] issuer with an intent to resell to the public" in connection with a security distribution.
Quinn & Co. v. S.E.C., 452 F.2d 943, 946 (10th Cir. 1971), cert. denied, 406 U.S. 957 (1972); cf
15 U.S.C. 77b(a)(11) (2000). Here, the comptroller, in receiving the property under state escheat
laws, does not appear to have purchased stock from an issuer. In addition, we assume that the
number of escheated shares in a particular company is typically small. See Quinn & Co., 452 F.2d
at 946 (indicating that whether a sale is a distribution depends in part on the number of shares sold).
Nor could the comptroller be said to have obtained the stock "with a view to" distributing
it. 15 U.S.C. 77b(a)(11) (2000). An underwriter participates in a "distribution" of a security. Id.;
see Ackerberg v. Johnson, 892 F.2d 1328, 1336 (8th Cir. 1989) (stating that the term "underwriter"
is "generally defined in close connection with the definition and meaning of 'distribution'"); S.E. C.
v. Van Horn, 371 F.2d 181, 188 (7th Cir. 1966) (stating that the statutory definition of"underwriter"
"specifically covers every person who participates in a distribution of securities"). While relevant
federal law does not define the term "distribution," see 15 U.S.C. 77b (2000), section 230.140 of
the Securities and Exchange Commission's corresponding regulations in 17 C.F.R. defines the term
"for certain transactions":
A person, the chief part of whose business consists of the
purchase of the securities of one issuer, or of two or more affiliated
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Texas. Attorney-General's Office. Texas Attorney General Opinion: GA-0309, text, 2005; (texashistory.unt.edu/ark:/67531/metapth275205/m1/3/: accessed November 21, 2018), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting UNT Libraries Government Documents Department.