The Ralston-Landreth-Gustafson Harmony: A Security!

Abstract

The legal definition of a security is incomplete but consistent with the economic function of securities transactions and the financial theory of securities valuation (the Capital Asset Pricing Model). The switch of the regulatory environment from buyer beware to seller disclose is justified because buyers lack access to information and control. Despite that this analysis makes Landreth and Ruefenacht appear questionable, the regulation of private sales of securities that arises from Ralston Purina, Landreth, and Gustafson is superior to what the drafters of the ’33 Act could have anticipated.