b'How to Legally Raise Private MoneyThe National Securities Markets Improvement Act of 1996 (NSMIA) pre-empts most states from regulating securities that are exempt under federal law (Public Law 104290Oct. 11, 1996, 110 Stat. 3416-3451).The U.S. Supreme Court opined in Reves v. Ernst & Young, 110 S. Ct. 945 (1990), that The fundamental purpose undergirding the Securities Acts is to eliminate serious abuses in a largely unregulated securities market." Thus, the purpose of the above Securities Acts is to provide a frame-work for regulation of private offerings of securities and to distinguish them from those that have undergone a rigorous review and approval pro-cess by securities regulators, as occurs during securities registration. WHAT ARE SECURITIES? The two types of securities that are discussed in this book are prom-issory notes and investment contracts. These are the securities that real estate investors and business entrepreneurs most often use as a source of funding for their companies. The term security was initially defined in Section 2(a)(1) of the Secu-rities Act, and subsequently updated in the Securities Exchange Act of 1934, Section 3(a)(10) 3 (collectively, the Securities Acts), which define se-curity as follows:348 Stat. 884, as amended, 15 U.S.C. 78c(a)(10)34'