Tanner v. State Corporation Commission, 266 Va. 170

Summary

The Supreme Court of Virginia, on rehearing, reconsidered portions of its earlier decision concerning whether accounts receivable agreements and promissory notes were securities subject to Virginia registration requirements. The court reaffirmed its ruling that the accounts receivable agreements were not investment contracts, but modified its treatment of notes issued under Rule 504 of Regulation D, holding that Rule 504 was promulgated under section 3(b) of the Securities Act and that such securities were not federally preempted covered securities. The case was reaffirmed as modified and remanded for reconsideration of penalties.

Holdings

1. The court reaffirmed its prior holding that the Agreements were not investment contracts, and therefore were not securities subject to the Virginia Securities Act's registration requirements. The court rejected the Commission's attempt to rely on a letter that was not part of the appellate record.
2. Rule 504 of Regulation D was issued under § 3(b) of the Securities Act of 1933, not § 4(2).
3. Securities issued pursuant to Rule 504, which was promulgated under § 3(b), are not covered securities under § 18(b)(4) of the Securities Act. They therefore are not preempted from state registration requirements and must be registered under Code § 13.1-507.

Questions Presented

1. Whether the court's prior determination that the Accounts Receivable Purchase and Sales Agreements were not securities resulted from a mistake of fact concerning the evidence in the record.
2. Whether Rule 504 of Regulation D was issued under § 4(2) or § 3(b) of the Securities Act of 1933.
3. Whether securities issued pursuant to Rule 504 are covered securities under § 18(b)(4) of the Securities Act and therefore exempt from registration under Virginia law.

Disposition

other