## Facts

- A.S. Goldmen & Co., Inc. (Goldmen) was a broker-dealer operating from a single office in New Jersey.
- Goldmen sought to underwrite an initial public offering of Imatec, Ltd. and pursued state-level registration in multiple jurisdictions.
- New Jersey did not grant unrestricted registration; instead, the New Jersey Bureau of Securities (Bureau) entered a Consent Order allowing only unsolicited sales of Imatec stock from New Jersey and prohibiting solicitation of the public for secondary-market purchases.
- Goldmen nevertheless solicited customers outside New Jersey to buy Imatec securities, using its New Jersey office as the base for offers and sales activity.
- The Bureau determined Goldmen’s conduct violated the Consent Order and the New Jersey Uniform Securities Law and issued a cease-and-desist order.
- The challenged statute, N.J.S.A. § 49:3-60, generally prohibits offering or selling unregistered, non-exempt securities “in this State,” which the Bureau construed to include offers and sales made from New Jersey.

## Issues

1. Whether the dormant Commerce Clause bars New Jersey from applying N.J.S.A. § 49:3-60 to prevent a New Jersey-based broker-dealer from offering or selling securities from New Jersey to purchasers in other states where the securities are authorized for sale.

## Decision

- The Third Circuit reversed the district court’s summary judgment for Goldmen.
- The court held N.J.S.A. § 49:3-60 did not violate the dormant Commerce Clause as applied to offers and sales originating in New Jersey.
- The court rejected the claim that the statute constituted impermissible extraterritorial regulation, concluding it regulated in-state conduct by firms operating within New Jersey.
- The court found no discriminatory or protectionist feature targeting interstate commerce; the statute applied evenhandedly to broker-dealers operating in New Jersey.
- The court upheld the Bureau’s authority to enforce New Jersey’s registration-based limits on securities activity conducted from within the state.

## Legal Principles

- A state may regulate securities offers and sales originating within its borders, including imposing registration requirements and restricting in-state solicitation, even when purchasers are located in other states.
- For dormant Commerce Clause purposes, a statute directed at in-state conduct is generally permissible absent discrimination against interstate commerce or regulation of transactions occurring wholly outside the state.
- State blue-sky regulation may coexist with federal securities regulation; absent federal preemption, a state may apply its securities-law standards to conduct occurring within the state.
- A law is not invalid as “extraterritorial” merely because its regulation of in-state conduct has downstream effects on interstate transactions.

## Conclusion

The Third Circuit held that New Jersey’s application of N.J.S.A. § 49:3-60 to stop a New Jersey-based broker-dealer from soliciting and selling unregistered, non-exempt securities from New Jersey to out-of-state buyers did not violate the dormant Commerce Clause because the statute regulated in-state conduct without discrimination or impermissible extraterritorial control.


A.S. Goldmen & Co., Inc. v. N.J. Bureau of Sec., 163 F.3d 780 (3d Cir. 1999)