There is no actual Section 4(1½) statutory exemption. It is assembled from two actual Securities Act exemptions, Section 4(a)(1) and Section 4(a)(2).
The so-called Section 4(1 ½) exemption may be available, for example, when the purchaser of the securities is financially sophisticated, has access to or receives information about the issuer, and would have been able to purchase the securities directly from the issuer in an exempt transaction like Reg D 506 (c) or 506 (b).
Section 4(1 ½) has been replaced with a cleaner regulation, Section 4(a)(7)
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What is Section 4(a)(7) of the Securities Act?
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