US SUPREME COURT DECISIONS

Section 17 (n) of the Securities Act of 1933 prohibits fraud in the "offer or sale" of any securities. Section 2(3) of the Act defines "sale" as including "every . . . disposition of a security or interest in a security, for value," and "offer" as including "every attempt or offer to dispose of . . . a security or interest in a security, for value." Petitioner was convicted of conspiracy to violate § 17(a) by making false representations to a bank concerning shares of stock pledged as collateral for loans. The Court of Appeals affirmed, rejecting petitioner's contention that the stock pledges did not constitute "offers" or "sales" under § 17(a).

Held: The pledge of stock to a bank as collateral for a loan is an "offer or sale" of a security under § 17(a). Pp. 449 U. S. 428-431.

(a) Obtaining a loan secured by a pledge of stock unmistakably involves a "disposition of [an] interest in a security, for value" within the statutory definition. Although pledges transfer less than absolute title, the interest thus transferred nonetheless is an "interest in a security," and it is not essential under the terms of the Act that full title pass to a transferee for the transaction to be an "offer" or "sale." Pp. 449 U. S. 429-430.

(b) When the terms of a statute are unambiguous, judicial inquiry is complete, except in rare and exceptional circumstances; no such circumstances are present here. Treating pledges as included among "offers" and "sales" comports with the Act's purpose and, specifically, with § 17(a)'s purpose to protect against fraud and promote the free flow of information in the public dissemination of securities. The economic considerations and realities present when a lender parts with value and accepts securities as collateral for a loan are similar in important respects to the risk an investor undertakes when purchasing securities. Both rely on the value of the securities themselves, and both must be able to depend on the transferor's representations, regardless of whether the transferor passes full title or only a conditional and defeasible interest to secure repayment of a loan. Pp. 449 U. S. 430-431.

609 F.2d 51, affirmed. chanrobles.com-red

Page 449 U. S. 425

BURGER, C.J.,delivered the opinion of the Court, in which BRENNAN, STEWART, WHITE, MARSHALL, POWELL, REHNQUIST, and STEVENS, JJ., joined. BLACKMUN, J., filed an opinion concurring in the judgment, post p. 449 U. S. 431.