2nd Circuit Finds Private Offering Does Not Require Issuing Prospectus

Plaintiffs who purchased securities in a private offering cannot have a cause of action under �12(a)(2) of the Securities Act of 1933, the 2nd Circuit has ruled. The 2nd Circuit joined three other circuits in holding that �12(a)(2) does not include private transactions. Prior to 1995, courts had ruled that �12 (a)(2) applies to private as well as public offerings of securities. But in 1995, the U.S. Supreme Court decision held that a private sales contract could not be considered a prospectus.

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