Notes Under the Securities Exchange Act of 1934: An Argument for a Plain Reading of the Nine Month Exemption

Monday, January 1st, 1990 at 12:00 am by Dirk L. Vincent
Dirk L. Vincent, Notes Under the Securities Exchange Act of 1934: An Argument for a Plain Reading of the Nine Month Exemption, 1990 Colum. Bus. L. Rev. 163

Recently, in Reves v. Ernst & Young, the Supreme Court sought to clear up the inconsistency surrounding notes under the Exchange Act. The Court affirmed the general transactional analysis from the circuits for “any note” and settled on a single test as the definitive approach to the term. The opinion, however, put the previously unchallenged interpretation of the nine month exemption into question. While the majority in Reves went to great lengths to avoid addressing the exclusionary language, a strong dissent from four of the Justices rejected the analysis in the circuits in favor of a plain reading. In light of this question left open by the Supreme Court, it is the purpose of this paper to argue that, contrary to the consensus among the circuits, the nine month exemption in the definitional section of the Exchange Act should be given a plain reading.

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