Securities and Exchange Commission v. Children's Hospital
United States District Court for the District of Arizona
214 F. Supp. 883 (D. Ariz. 1963)
Relevant factsFree
Children's Hospital and its two salaried directors, Jennings and Ross (defendants), sold over $1.3 million in bonds to fund hospital construction while planning to withhold 10% of proceeds as their own compensation and awarding the construction contract to a company in which they held a significant interest; the SEC (plaintiff) sued to enjoin the bond sales as violating Securities Act Section 17(a), and the defendants claimed the charitable-purpose exemption.
IssueFree
Whether an organization that operates to enrich its promoters with profit meets the charitable-purpose exemption of the Securities Act of 1933.
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