## Facts

- Norman J. Ackerberg purchased 16,500 unregistered shares of Vertimag Systems Corporation in March 1984 for $99,000.
- He bought 12,500 shares from Clark E. Johnson, Jr. (Vertimag’s founder, board chairman, and largest individual shareholder) and 4,000 shares from Roger G. Lindquist.
- Lindquist’s shares were held by a partnership that included Lindquist and Gary M. Petrucci, a senior vice president at Piper, Jaffray & Hopwood, Inc. (PJH) who handled Ackerberg’s brokerage account.
- Ackerberg paid $6.00 per share and a PJH commission of $2,062.
- The purchase followed Vertimag’s proposed private placement of securities at $6.00–$6.50 per share; Ackerberg expressed interest in investing about $100,000.
- Petrucci provided Ackerberg a 99-page private placement memorandum with detailed information about Vertimag.
- On March 17, 1984, Ackerberg signed a subscription agreement stating the securities were unregistered and not readily transferable; Ackerberg testified he read and understood it.
- After the investment performed poorly, Ackerberg sued Johnson, PJH, and related individuals, asserting federal securities, state securities, and RICO claims.

## Issues

1. Whether Johnson and the PJH defendants qualified for the Securities Act of 1933 § 4(1) exemption because they were not “underwriters” under § 2(11) in the sale to Ackerberg.
2. Whether the sale to Ackerberg should be treated as part of a public distribution or as a private resale.
3. Whether the district court erred by granting partial summary judgment to Ackerberg on his 1933 Act claims (and related damages determinations) and by refusing to compel arbitration of those claims.

## Decision

- The Eighth Circuit reversed the district court’s partial summary judgment for Ackerberg on the Securities Act of 1933 claims.
- The court held the record did not establish, as a matter of law, that Johnson or the PJH defendants were “underwriters” or that the transaction was a non-exempt public offering.
- The case was remanded for further proceedings consistent with the correct § 4(1) and underwriter analysis, including reconsideration of matters affected by that error (including arbitration-related handling and damages).

## Legal Principles

- Securities Act § 5 registration requirements do not apply to transactions exempt under § 4(1), which covers transactions by persons other than issuers, underwriters, or dealers.
- “Underwriter” under § 2(11) depends on whether the seller purchased from an issuer “with a view to” distribution, or otherwise participated in a distribution; the inquiry focuses on the nature of the specific transaction, not merely a company’s broader financing activity.
- Whether a transaction is a public offering turns on whether offerees need the protections of registration; relevant factors include investor sophistication and access to information comparable to a registration statement.
- A substantial holding period by a selling shareholder may weigh against finding that the shares were acquired with a view to distribution.
- Private placement materials and contractual acknowledgments that securities are unregistered and restricted may support characterizing a sale as a private resale rather than a public distribution, affecting underwriter and exemption determinations.
- Summary judgment is improper where the record does not compel the legal conclusion that the sellers and intermediaries were underwriters and the transaction was non-exempt.

## Conclusion

The Eighth Circuit reversed a district court’s liability and damages summary judgment under the Securities Act of 1933, holding that the sale of unregistered Vertimag shares to a sophisticated purchaser who received extensive disclosure could not be treated as a non-exempt public distribution as a matter of law, and that § 4(1) exemption and “underwriter” status required application of the correct transaction-specific standards on remand.


Ackerberg v. Johnson, 892 F.2d 1328 (8th Cir. 1989)