In May 2009, OfferMe Corporation generally advertises that it will make a $4 million offering of stock in June.OfferMe makes the offering as advertised and, ten days after the first sale, notifies the Securities and Exchange Commission (SEC). All buyers of the stock are given material information about the company, its business, and the stock. Before the end of the year, the offering is completely sold out. The buyers include forty unaccredited investors and fifty accredited investors. OfferMe does not register the offering. The SEC files a suit against OfferMe, seeking civil sanctions on the ground that this offering was not exempt from registration. OfferMe argues that the applicable exemption is Rule 505 of Regulation D of theSecurities Act of 1933and that because of this exemption, any resale of the stock is also exempt.

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