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I'm trying to synthesize Reg D, 12(a), and Secondary Transactions, and it's rough haha. This is my own question from looking at notes and hypos, not an exam question:

Say a seller takes no steps to warn 10 unaccredited purchasers under a 505 offering that the securities are restricted, and those purchasers immediately turn around and sell the shares for a $1 profit. Because they sold so fast, they are clearly a 2(a)(11) underwriter, especially because the profit was small (making it seem they are simply a conduit). Thus, both those investors (as underwriters) and the issuer no longer fit into 505 (because there were not proper resale restriction attempts), and are liable under 12(a)(1) for violating gun-jumping rules under s. 5. Furthermore, if the initial purchasers were found through cold calling, since this is 505, there would be general solicitation violations.

Right? Am I missing something?

I'll play...

Yes, the second seller would be considered an underwriter, those securities would not have had time to come to rest, so there's really no real way for that seller to try and argue that he shouldn't be considered a statutory underwriter. He would be selling securities that either need an exemption or registration and, since they aren't registered or this transaction exempted, the sale would violate 12(a)(1). The securities being moved so quickly, without registration or another transaction exemption, after having been properly issued in an exempt transaction (the original Rule 505 issuance) would also cause that issuance to lose its exemption. That could leave the first seller liable for selling unregistered, non-exempt securities under 12(a)(1), as well. To avoid this predicament, the restricted securities should have a legend affixed to them stating that they are restricted, and transfer agents should be made aware of any terms and conditions of restrictions, such that the securities aren't transferred unless they are properly registered or the transaction exempted.