There have been highly respected opponents of the view that the earth is round. Yet it always was, and always will be, round. Similarly, most corporate finance textbooks explain that, when an issuer sells its securities to an investor, it is, and always will be, a primary sale of securities. When that investor turns around and sells those securities to another investor, these textbooks explain that is a secondary sale of securities.
Pretty straightforward? Perfectly clear? Not exactly. Physicists have told us that the earth is mostly, but not perfectly, round. And the US Securities and Exchange Commission has informed us that, in certain circumstances, secondary offerings are primary offerings. The SEC has served notice that the textbook definitions of primary and secondary offerings might not necessarily capture the substance of a particular transaction. And for this reason the SEC has stated that the traditional approach for determining when primary...