Busch v. Carpenter
United States Court of Appeals for the Tenth Circuit
827 F.2d 653 (1987)
Sonic Petroleum, Inc. (Sonic), incorporated and initially based in Utah, sold stock exclusively to Utah residents in October and November 1980 before ever conducting any actual business, registering the offering with Utah but not the SEC based on the intrastate exemption. Shortly after, in May 1981, Sonic merged with an Illinois company, and the merged entity deposited most of the Utah offering's proceeds in Illinois; Paul and Linda Busch (plaintiffs) purchased Sonic stock the following month and later sued Sonic's officers and directors (defendants), who argued the intrastate exemption applied. The trial court granted the defendants summary judgment, and the Busches appealed.
Whether the intrastate exemption from securities registration requires that the company conduct most of its income-producing activity in the relevant state.