The Securities and Exchange Commission (SEC) filed a lawsuit against Ralston Purina Co. in 1952, alleging that the company violated securities laws by selling shares to its employees without registering the sales with SEC as required under Section 5 of the Securities Act of 1933. The company argued that these were private offerings exempt from registration requirements because they were only offered to select employees who had access to similar information about the company's financial status as would be included in a public prospectus. However, upon review, it was found that not all employee shareholders had such access or knowledge about their investment risks due to their varying positions within the organization. Therefore, Supreme Court ruled in favor of SEC stating that exemption for private offering applies when it is demonstrated that offerees have access to same kind of information as registration statement would disclose; which wasn't true for all employee shareholders at Ralston Purina Co., thus making them violate securities law.

In the dissenting opinion for SECURITIES & EXCHANGE COMMISSION v. RALSTON PURINA CO., Justice Jackson argued that the majority's decision was too broad and could potentially undermine the Securities Act of 1933. He contended that by ruling in favor of Ralston Purina, a company which had offered stock to its employees without registering with the SEC, it would create an exemption not intended by Congress when they enacted this law. Jackson believed that all public offerings should be registered to protect investors and maintain transparency in financial markets. He also expressed concern about potential abuse from companies who might exploit this loophole to avoid registration requirements under guise of employee benefit plans or similar schemes.