Spider Manufacturing Corp. planned to raise capital for a plant expansion by making several stock offerings. Spider, a privately held company, engaged Steward, CPA, to audit its December 31, year 2, financial statements. Spider told Steward that the financial statements would be included in the prospectuses for the stock offerings. Steward issued an unqualified opinion on Spider's financial statements. These audited financial statements were distributed to investors in each stock offering. In year 3, Spider raised an additional $16,450,000 through the following stock offerings, which were sold completely:

1. June-Spider made a $450,000 unregistered offering of Class B nonvoting common stock under Rule 504 of Regulation D of the Securities Act of 1933. This offering was sold over two years to 30 non-accredited investors and 20 accredited investors with no general solicitation. The SEC was notified eight days after the first sale of this offering.

2. August-Spider made a $6,000,000 unregistered offering of preferred stock under Rule 505 of Regulation D of the Securities Act of 1933. This offering was sold during a one-year period to 40 non-accredited investors by private placement. The SEC was notified 18 days after the first sale of this offering.

3. November-Spider made a $10,000,000 unregistered offering of Class A voting common stock under Rule 506 of Regulation D of the Securities Act of 1933. This offering was sold over two years to 200 accredited investors and 30 nonaccredited investors through a private placement. The SEC was notified 14 days after the first sale of this offering

Was the SEC correct in claiming that this offering was not exempt from registration?

True

False