The Securities Act

The Securities Act was designed to protect investors and increase investor confidence in the market through a system of "full and fair disclosure of securities sold in interstate and foreign markets” (O'Connor, 2014). Private University, the private nonprofit educational institution decides to issue “Shares in Learning” certificates in a one-time offering to the public. Seaquist (2012) stated the Securities Act of 1933 applies only to initial public offerings (IPOs). The University “certificates” are not classified as a “Securities” they are merely gift certificates. Using the Howey test, though you are investing in your future they are no expected profits or return on the investment. The certificates can only be redeem for two undergraduate or one graduate college credit at Private University. Seaquist (2012) stated Securities issued by nonprofit religious, charitable, educational, benevolent, or fraternal organizations; are exempt from registration. Private University is an educational institution that is exempt from registration.

No my answer does not change if the certificates were issued by Private College, a proprietary for-profit institution that does business in all 50 states. The certificates are not classified as a “Securities” they are merely gift certificates. The certificates are not expected to yield a profit, interest, or monetary value. The certificates can only be redeem for two undergraduate or one graduate college credit at Private University. If there was no expiration it could be valid investment to help control or combat the rising tuition cost over the course of a degree. Nevertheless, is not governed by the Securities and Exchange Commission (SEC) under the Securities Act of 1933.

O'Connor, S. (2014). The Securities Act of 1933. Brooklyn Law Review, 79(3), 1233-1264.