Ralston Purina Co. (defendant) offered its stock to its “key” employees for sale. “Key” employees included any employee eligible for a promotion, including many low-income workers that may not otherwise have the opportunity to engage in securities transactions. The Securities and Exchange Commission (plaintiff) brought an action against Ralston, alleging that the sale of stock by Ralston required it to register said stock. Ralston argued that the sale was exempted as a private offering since the stock was only offered to employees. The district court ruled in favor of Ralston, with the court of appeals affirming. The SEC then petitioned for certiorari to the United States Supreme Court.