Securities Act Section 3(a)(10) Exemption Representation

Securities Act Section 3(a)(10) Exemption Representation

Section 3(a)(10) of the Securities Act of 1933 is an exemption from SEC registration for offers and sales of securities when all of the following conditions are met:

  • The securities must be issued in exchange for securities, claims, or property interests; they cannot be offered for cash.
  • A court or authorized governmental entity must approve the fairness of the terms and conditions of the exchange.
  • The reviewing court or authorized governmental entity must: find, before approving the transaction, that the terms and conditions of the exchange are fair to those to whom securities will be issued; and be advised before the hearing that the issuer will rely on the Section 3(a)(10) exemption based on the court’s or authorized governmental entity’s approval of the transaction.
  • The court or authorized governmental entity must hold a hearing before approving the fairness of the terms and conditions of the transaction.
  • A governmental entity must be expressly authorized by law to hold the hearing, although it is not necessary that the law require the hearing.
  • The fairness hearing must be open to everyone to whom securities would be issued in the proposed exchange.
  • Adequate notice must be given to all those persons.
  • There cannot be any improper impediments to the appearance by those persons at the hearing.

If you are an issuer or debt holder considering engaging in a securities transaction which would result in reliance on the Section 3(a)(10) exemption you need to seek counsel experienced in the litigation and settlement of claims in accordance with the Section 3(a)(10) exemption.

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