Japanese investor bought shares in a Utah company that develops drinking water system in Japan. The investor moved for a summary judgment, based on the claim that the investment constituted a sale of unregistered securities in violation of the Securities Act.
The court agreed. Had the company sold its shares to the investor, the investment would have been exempt from the Securities Act's prohibition of sale of unregistered shares. But because it was a sale from a previous investor to another.
This is an interesting case--basically an instance where a sloppily structured business deal can come back to haunt.