Securities and Exchange Commission v. Datronics Engineers, Inc.

Datronics (defendant) created 'spin-off' transactions in which private companies were absorbed into newly formed corporations, with the private companies' principals receiving most of the new shares and Datronics receiving the remainder, which it either kept or distributed to employees as compensation; the SEC (plaintiff) sought to enjoin these transactions as sales of unregistered securities, and the district court ruled the transactions were not sales because no value was exchanged for the stock.