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There are 2,510,000 shares of Continental Enterprises, Inc., issued and outstanding. D with members of his immediate family and his right-hand man and first lieutenant, Gerbert, owned 1,149,775 or in excess of 40%. The balance of the stock was in the hands of approximately 5,000 outside shareholders. Between August 1, 1960, and January 31, 1962, D himself sold 404,150 shares of Continental through six brokerage houses, Gerbert sold 53,000 shares through three brokerage houses and that members of the D family, including D's wife, two brothers, a sister, the D Family Foundation and four trusts for D's children sold 176,675 shares through six brokerage houses. P brought suit against D for failure to register the stock before its sale. Ds took the position at the trial that they had no idea during the period of the alleged conspiracy, stipulated to be from January 1, 1960, to January 31, 1962, that there was any provision of law requiring registration of a security before its distribution by a controlling person to the public. The court ruled for P. D appealed.

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