Series 63 Chapter 2 : Securities Registration
The registration remains effective for __________ from the effective date, or until the offering is complete.
1 year
Which of the following is a security that must be registered? A Non-exempt B Listed C Non-issuer D Active Good Job!
A Non-exempt A non-exempt security is one that must be registered.
Which of the following is not considered an exempt security according to the USA? A 15-year Toronto, Ontario, Canada bond B 15-year Mexico City bond C 15-year Paris, Texas GO bond D 15-year Mexico bond
B 15-year Mexico City bond Bonds issued by recognized foreign governments, such as the Mexican national government, are exempt from state registration. Bonds issued by Canadian national and municipal governments are also exempt from registration in a state. In addition, bonds issued by a U.S. municipality are exempt. Bonds issued by municipalities outside the U.S. and Canada would have to register with a state.
Which of the following are elements of an investment contract and result in a financial instrument being considered a security? I The expectation of profits from the efforts of a third party II An investment of money III A common enterprise IV A liquid trading market A I, II, III, and IV B I, II, and III C III and IV D I and II
B I, II, and III One of the most common ways of deciding whether a financial instrument fits the definition of a security or not is to apply a test that is associated with a famous Supreme Court decision in the Howey case. The Howey case revolved around whether a particular instrument was an "investment contract" and, therefore, a security. The test that the court applied had 3 elements. To be considered an investment contract, the instrument must involve 1) an investment of money 2) in a common enterprise, with 3) the expectation of profits from the efforts of a third party. If all 3 elements are present, the instrument is an investment contract and is subject to federal and state securities laws.
Which of the following is considered a security, according to the Act? A Individual retirement account B Non-registered stock in a closely held family corporation C Endowment contract D Fixed annuity
B Non-registered stock in a closely held family corporation Stock is included in the USA definition of a security. A fixed annuity is an insurance product. An IRA is an account that may contain securities. Endowment contracts are excluded from the definition of a security.
Registrations are effective for: A For a period of time determined by the Administrator, but not more than 18 months B One year from the date the Administrator authorizes the security for sale C Until the next registration statement is filed D One year from the date that the registration statement is submitted
B One year from the date the Administrator authorizes the security for sale The effective date is the date the Administrator authorizes the security to be issued. The registration remains effective for 1 year from the effective date.
In addition to the general requirements for all offerings, the registration process must be completed by using one of 3 registration methods:
Filing (notification) Coordination Qualification
Registration by Filing
The easiest and least costly form of state registration and is only permitted by qualified issuers who have filed a registration statement with the SEC as required under the Securities Act of 1933
notice filing
The issuer is still required to pay a filing fee with each state involved and may be required to submit the SEC registration documents to each Administrator
Securities issued by Canada or any of its political subdivisions and government issued securities, including agency issues, are __________
exempt securities under the USA.
Unregistered securities sold by certain fiduciaries, such as executors of an estates, as well as private placements offered to 10 or fewer persons (no limit on institutional investors) during a 12-month period with no commission paid are ___________________.
exempt transactions
Registration by coordination
is used in conjunction with SEC registration. If there is a pending application to register a security with the SEC under the Securities Act of 1933, the security may also be registered by coordination concurrently with Administrators in multiple states under the USA.
A security that is not registered, or is being registered, federally with the SEC would need to be registered with the state (if required to register with the state) by using
qualification.
The Administrator may require the issuer to file reports, no more frequently than _________, after the registration becomes effective and to keep the registration statement updated.
quarterly
A _____________ is exempt based on what type of entity it represents.
security
An escrow account is an account managed by a third party where
specific funds are held and only disbursed when certain conditions are met.
A ______________________ is exempt based on how the transaction is processed.
transaction
Which of the following is not a security? A An apartment building B Preorganization certificates or subscriptions C Evidence of indebtedness D Treasury stock
A An apartment building Real estate, like an apartment building, is not included in the USA definition of a security.
According to the Uniform Securities Act, if the Administrator issues a stop order denying the effectiveness of a registration statement, which of the following must always be one of the grounds cited? A The underwriters would receive excessive compensation B The denial is in the public interest C There was a false statement made in the registration documents D The proper filing fee was not paid
B The denial is in the public interest
All the following are correct concerning registration of securities with the Administrator, except: A Registration remains effective for 1 year from the effective date B The fee for registering securities is typically a percentage of the offering price of the securities to be sold in the state C A registration may be withdrawn prior to its effective date for a full refund of registration fees D The Administrator may require the filer to submit updated information not more than quarterly after its registration becomes effective
C A registration may be withdrawn prior to its effective date for a full refund of registration fees
Which of the following financial instruments does not fall within the definition of a security according to the USA? A Currency option B Collateral trust certificate C Endowment policy D Preorganization certificate
C Endowment policy The Uniform Securities Act contains a very broad definition of what is considered a security. This is because state securities laws were passed to protect investors from the investment scams and schemes that were common around the beginning of the 20th century, and, unfortunately, are still more common than we would like today. The USA's definition of a security includes: collateral trust certificates, currency options, and preorganization certificates. Endowment policies are excluded from USA's definition of a security since they do not have investment risk.
When selling securities directly to insurance companies, the transactions are: A Restricted to separate account transactions B Limited to registered securities C Exempt from state regulatory control D Under state regulatory control
C Exempt from state regulatory control Selling securities directly to an insurance company is an example of an institutional investor transaction, which is an exempt transaction. As an exempt transaction, both the transaction and the security are exempt from state registration and regulation. Institutional investor transactions with insurance companies are not restricted to separate account transactions.
Which of the following is a lawful representation to a client regarding a registered security? A A registered security has not been reviewed by the Administrator B Registered securities tend to outperform unregistered securities C It is registered with the Administrator D The Administrator releases a security for sale only if the registration statement is accurate
C It is registered with the Administrator Telling a customer that a security is registered with the Administrator is appropriate. Registration entails review and release for sale without the Administrator taking a position as to the accuracy or adequacy of the prospectus or registration statement. Comments to the contrary are misleading and constitute fraud.
All the following are required when a security is registered by qualification, except: A What the proceeds from the sale of the securities will be used for B Underwriter's compensation, selling expenses, and copies of underwriting agreements C Notarized copies of all documents filed with the SEC D Amount of the issuer's securities held by any officer or director must be disclosed
C Notarized copies of all documents filed with the SEC Securities registered by qualification are not registered at the federal level with the SEC.
Registration by notification is also referred to as: A Qualification B Administration C Registration by filing D Coordination
C Registration by filing Registration by notification is also known as registration by filing.
Which of the following Acts was established to coordinate the regulatory activity between federal and state regulators? A The National Coordination of Markets Act of 1996 B The Securities Act of 1933 C The National Securities Markets Improvement Act of 1996 D The Trust Indenture Act of 1939
C The National Securities Markets Improvement Act of 1996 The National Securities Markets Improvement Act (NSMIA) of 1996 served to coordinate the regulatory activity between federal and state regulators. It aims to eliminate duplicate registration requirements at both the state and federal levels.
Under the USA, what is the maximum number of non-institutional investors who can receive offers for a private placement in order for it to be considered an exempt transaction? A 25 B 35 C 15 D 10
D 10 Under the USA, a private placement may be offered to no more than 10 non-institutional buyers within 12 months. The seller must believe that the purchasers are buying for investment only, there can be no solicitation or advertising used, and there must be no commissions paid, directly or indirectly. Note that a private placement under Regulation D (federal) limits the number of investors to 99, with a maximum of 35 investors being non-accredited or all investors being qualified purchasers.
The Administrator has decided to suspend the effectiveness of an issuer's registration statement. The registrant has been notified and has been granted a hearing on this matter. The hearing must be scheduled within: A 45 days B 30 days C 7 days D 15 days
D 15 days The Administrator may summarily (without advance notice) postpone or suspend the effectiveness of a registration statement, but then they must allow an opportunity for a hearing. The Administrator would immediately notify the applicant, the issuer, and any other person on whose behalf the offering is being made of the postponement or suspension. If one of those notified requests a hearing (in writing), it must be scheduled within 15 days. If the Administrator eventually makes the order permanent, the interested parties must be given the reasons for the order in writing.
A pro football team in California is preparing to register a security that they intend to sell exclusively in California. The method of registration that they will likely utilize is: A Notification B Implementation C Coordination D Qualification
D Qualification Qualification is the registration method most likely used when a security will only be registered and sold in one state.
All the following are federal covered securities, except: A Stock listed on the NYSE B Stock listed on Nasdaq C Securities of companies registered under the Investment Company Act of 1940 D Securities listed on a local exchange that is not registered with the SEC
D Securities listed on a local exchange that is not registered with the SEC For a security to be federal covered, it must be listed on the Nasdaq or a national or regional exchange that is registered with the SEC.
Pursuant to the Uniform Securities Act, the Administrator may suspend a registration for all the following, except: A An underwriter on the issue has been suspended from securities industry by a court in another state B The issuer is dumping toxic waste illegally into a river C The Administrator learns of an outrageous bonus plan for promoters selling the issue D The Administrator discovers, after the registration has gone into effect, that it was not accompanied by the proper filing fee
D The Administrator discovers, after the registration has gone into effect, that it was not accompanied by the proper filing fee
registration by notification
This method allows an issuer to register securities by filing the same information supplied to the SEC with each State Administrator involved in the offering.
Conditions to be eligible for this type of registration
issuer must have a net worth of at least $4 million, have at least 400,000 shares held by the public, there must be at least 4 market makers for at least 30 days during the preceding 3 months, and the offering price must be at least $5 per share.
Which of the following best defines a security? A An investment of money in a common enterprise with the expectation of profit from the efforts of a third party B An ownership interest in a negotiable instrument C Any investment opportunity in which there is profit potential D An interest in a corporation that trades on a national securities exchange and is sold through a third party
A An investment of money in a common enterprise with the expectation of profit from the efforts of a third party The method of defining a security most frequently used by the courts is the Howey test, which states that a security is an investment of money in a common enterprise with the expectation of profit from the efforts of a third party. The other choices may or may not describe a security, but the question asks which of the following best defines this term.
Which of the following is an exempt security under the Uniform Securities Act? A Common stock of a railroad B Common stock of a bank holding company C Bonds issued by the city of Lima, Peru D Cumulative preferred stock issued by a publicly traded company trading in the OTC market
A Common stock of a railroad According to the Uniform Securities Act, securities issued by railroads and other 'common carriers,' such as airlines, are exempt securities. Securities trading in the OTC market are subject to registration in the state. Bonds issued by foreign municipalities must also be registered in a state unless it is a Canadian municipal bond. Additionally, stock issued by a bank holding company requires state registration under the USA.
To qualify under the world-class foreign issuer exemption, a security must meet which of the following criteria? I The issuer is not organized under U.S. or any state law II It is a non-preferred equity security or a non-convertible debt security III The issuer has been in business for the past 10 years IV The issuer has at least $1 billion of market value of non-preferred equity shares owned by nonaffiliates A I, II, and IV B II, III, and IV C I and IV D I, II, and III
A I, II, and IV World class foreign issuers are companies that meet the following criteria: *The issuer is not organized under U.S. or any state law. *The issuer has been in business for the past 5 years, not 10 years as stated in Choice III. *The issuer has at least $1 billion or more of market value of equity shares (not including preferred stock) owned by nonaffiliates, with an overall value of equity shares of at least $3 billion. *The issuer's equity securities are listed for trading on a foreign securities exchange. Equity shares (not including preferred stock) and non-convertible debt securities (rated in the top four credit ratings) issued by world class foreign issuers are exempt from state securities registration and advertising/sales literature filing requirements.
According to the Uniform Securities Act, if an instrument is determined not to be a security, which of the following would be true? I An agent is prohibited from offering it to retail customers II In order to be sold by an agent, a valid securities license is required III An agent does not need be registered in the state to sell it IV The instrument does not need to be registered in the state in order for it to be sold to the public A III and IV B II, III, and IV C I D II and III
A III and IV The USA regulates the sale of securities, such as stocks, bonds, and variable insurance products. For products that are not considered securities, such as traditional life insurance, neither the products themselves nor the agents who sell them need to be registered under the USA.
Which of the following is not included in the definition of a security under the Act? A Money orders B Certificate of interest or participation in a profit-sharing agreement C Pre-organization certificates D Unit investment trusts
A Money orders Money orders are not considered securities. Whereas unit investment trusts, certificates of interest, or participation in any pension or profit-sharing plan, and pre-organization certificates are included in the definition of a security. A security can either be required to be registered in a state or exempt from registration.
An interest in which of the following is defined as a security under the Uniform Securities Act? A Multilevel distribution agreements B Keogh plans for self-employed individuals C A personally-owned condominium D Canadian dollars
A Multilevel distribution agreements Multilevel distribution agreements (or multilevel marketing plans) are defined as securities. Retirement plans, such as Keogh plans, are not securities although one may purchase securities within a retirement plan. Currencies are not securities. Personally-owned real estate is not a security, but condominiums in a rental pool are securities.
Which of the following is not considered an exempt security? A Offerings of securities that are not federal covered securities B Debentures of an NYSE-listed issuer registered with the SEC C Collateral trust certificate of an issuer whose stock trades on Nasdaq D Common or convertible preferred stock listed on a regional exchange
A Offerings of securities that are not federal covered securities Common or convertible preferred stock listed and traded on national or regional exchanges or Nasdaq are federal covered securities and are exempt from dual registration requirements at the state level under the USA. Bonds issued by those exchange-traded companies are also exempt from dual registration at the state level.
Which of the following is true concerning an unsolicited, non-issuer transaction? A The Administrator may require a written statement signed by the investor confirming that this exempt transaction was unsolicited B The security is exempt if the request is unsolicited by the agent and requested by the investor C The USA restricts what kinds of securities an investor may request D The USA permits up to 6 per year
A The Administrator may require a written statement signed by the investor confirming that this exempt transaction was unsolicited An unsolicited offer to buy a security means that the idea to purchase the security originated with the customer, not the agent. The Administrator may require a written statement signed by the investor confirming that this exempt transaction was unsolicited. Also, it is the transaction that is exempt when unsolicited, not the security.
As defined by the Uniform Securities Act, all the following are exempt transactions, except: A An individual finds out about a hot new company their broker doesn't know about and places an order for 100 shares B A broker-dealer offers a new issue of stock to 12 of its best retail customers in the state C A shareholder with 5,000 shares of XYZ Company sells them to their neighbor D The custodian of a trust for a minor purchases AA rated bonds of ABC Corporation over-the-counter for the trust
B A broker-dealer offers a new issue of stock to 12 of its best retail customers in the state The shareholder's transaction is exempt as an isolated non-issuer transaction and the individual's transaction is exempt as an unsolicited non-issuer transaction handled through a registered broker-dealer. The custodian's transaction is exempt as the transaction of a fiduciary. The broker-dealer's transaction is not exempt because it is offering a nonexempt security to retail customers who live in that state.
Which of the following is not an exempt security under the USA? A Bank stock B A corporate bond with a 5% coupon C Shares of a nonprofit entity D A municipal bond with a 4.5% yield
B A corporate bond with a 5% coupon Corporate stocks or corporate bonds are non-exempt securities, which must be registered with the SEC under the Securities Act of 1933, as well as the state according to the USA.
Which of the following may be registered by coordination? A An investment adviser B A new issue C An agent D A broker-dealer
B A new issue Only securities may be registered by coordination.
To register securities under the USA, a registration statement must be filed with the state: A Blue-sky committee B Administrator C Treasurer D Governor
B Administrator To register securities under the USA, a registration statement must be filed with the State Administrator.
All the following are considered exempt transactions according to the USA, except: A A transaction between an issuer and an underwriter B An offer of an unregistered, non-exempt security by an agent of a broker-dealer C A private placement offer to 9 retail customers in a 10-month period where the agent received no compensation D A sale of a mortgage bond
B An offer of an unregistered, non-exempt security by an agent of a broker-dealer An offer of an unregistered, non-exempt security by an agent of a broker-dealer is not an exempt transaction nor is it permitted under the Act. The only time it is acceptable to trade an unregistered, non-exempt security is if the trade was directed by the customer on an unsolicited basis (with proper documentation to support it). Exempt transactions include: * Private placements offered to 10 or fewer retail customers within 12 months and no commission paid * Any bond backed by real estate (mortgage bond) * Transactions between an issuer and an underwriter * Unsolicited, non-issuer transactions through a broker-dealer Since the offer for the unregistered, non-exempt security was solicited by the agent, it is NOT exempt.
When does a registration by coordination become effective? A 5 days following the date of filing in the state if no ruling is forthcoming from the Administrator B At the same time that the federal registration becomes effective as long as the registration statement has been filed with the state for 10 days C At the same time as the state registration filing D At the time of the filing with the Administrator
B At the same time that the federal registration becomes effective as long as the registration statement has been filed with the state for 10 days Registration by coordination is done in conjunction with a federal registration, as long as the registration statement has been on file with the state for 10 days.
On an irregular and infrequent basis, the president of a small corporation, whose shares are publicly traded on the OTC market, exchanges some of their personal shares for rare comic books for their collection. I These sales may be described as isolated nonissuer transactions II These are not sales III These are exempt transactions IV This is permitted only if the shares are registered A II, III, and IV B I and III C II D I and IV
B I and III The transaction described is an isolated nonissuer transaction. Note that isolated does not necessarily mean 'one time'. Isolated traditionally means that the transaction does not occur with regularity. Under the USA, isolated nonissuer transactions are exempt, whether or not the transaction is executed through a broker-dealer.
Which of the following conditions must be met for a private placement to be considered an exempt transaction under the USA? I The securities may be offered to a maximum of 10 non-institutional customers II The securities may be sold to a maximum of 35 non-accredited customers III No compensation above 5% may be paid to the selling broker-dealer IV No compensation may be paid to the selling broker-dealer A I and III B I and IV C II and III D II and IV
B I and IV In order to retain exempt status under the USA, a private placement may only be offered to a maximum of 10 non-institutional customers and must be sold without commissions or other forms or remuneration. The federal exemption under the Act of 1933 allows a private placement to be sold to up to 35 non-accredited buyers.
The ABC Group specializes in forming groups of investors to finance the acquisition of rights to mineral deposits and other natural resources with high, albeit speculative, development potential. They package these interests, and the investors receive evidence of their interest, in certificate form. ABC has an arrangement with a broker-dealer to market unsold interests through private placements. Which of the following would be true? I The certificates of interest are securities II The certificates of interest are not securities III ABC Group is an issuer IV The broker-dealer is an issuer A I and IV B I only C I and III D II and III
B I only The interests described would be considered securities under the Howey test: investment of money in a common enterprise with an expectation of profits from the efforts of third parties (whoever is actually developing the natural resources). In one of the odd quirks of the Uniform Securities Act, however, interests in oil, gas, or mining titles have no issuer, therefore, only Choice I is correct.
An agent of a registered broker-dealer would like to know if they are allowed to sell Q stock in a particular state. Which of the following would make the sale lawful under the Uniform Securities Act? I The security is a federal covered security II The security or transaction is exempt III The security is registered under the USA A I and III B I, II, and III C I and II D II and III
B I, II, and III According to the Uniform Securities Act, it is unlawful for any person to offer or sell any security unless, 1) it is registered under the USA, 2) the security or transaction is exempt under the USA, or 3) it is a federal covered security. Note that unless a security falls within one of these groups, an agent may not sell it in the state.
A transaction effected by an executor, administrator, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator is considered to be in a: A Proxy capacity B Agent capacity C Fiduciary capacity D Third-party capacity
C Fiduciary capacity A transaction effected by an executor, administrator, sheriff, marshal, receiver, trustee in bankruptcy, guardian, or conservator is considered to be in a fiduciary capacity and is identified by the USA as an exempt transaction.
XYZ Industries has filed a registration statement with State A to offer $6,000,000 of equity securities. According to the Uniform Securities Act, this registration remains in effect: A Until the end of the company's fiscal year B Unless withdrawn by the issuer or revoked by the Administrator C For 1 year after the effective date D Until the end of the calendar year
C For 1 year after the effective date According to the Uniform Securities Act, once a registration statement for securities is effective, it remains so for 1 year after the effective date. The Administrator may require the issuer to keep the registration statement up-to-date, as well as file reports about the progress of the offering. If there are securities remaining unsold after the 1-year period elapses, the issuer may apply to the Administrator for an extension, which may or may not be granted.
Which of the following is not a true characteristic of registration by coordination? A Registration is done in conjunction with the federal registration B May register with the Administrator as long as there is a pending application with the SEC C Frequently used when only registering in one state D Is used for initial public offerings
C Frequently used when only registering in one state A registration by coordination is frequently used to register a security in several states. With this method, the issuer is completing their SEC registration at the same time as their state registration. Both usually become effective at the same time.
Which of the following are federal covered securities? I. Shares of XYZ Mutual Fund II. ABC common stock, listed on the New York Stock Exchange III. Debentures of ABC Co., whose common stock is listed on the NYSE IV. WXYZ common stock, listed on the Capital Market sector of Nasdaq A II only B II and III only C I, II, III, and IV D I, II, and III only
C I, II, III, and IV Federal covered securities include those issued by investment companies, securities listed on the New York Exchange, securities that are equivalent or senior to listed securities, and securities listed on any of the Nasdaq Markets (Capital Market, Global and Global Select).
Under the Uniform Securities Act, which of the following is true regarding an Administrator's order to deny, suspend, or revoke a security's registration? I The order must be in the public interest II The Administrator may not enter a stop order against an effective registration statement on the basis of a known fact when the statement became effective unless action is taken within 30 days of the effective date III The Administrator must have at least 2 reasons for the order IV The Administrator may not issue the order without a prior hearing A II, III, and IV B I and II C I, II, and III D I only
C I, II, and III An Administrator may not deny, suspend or revoke a security's registration without at least 2 reasons, one of which must be that the denial, suspension, or revocation is 'in the public interest'. The Administrator may not enter a stop order against an effective registration statement on the basis of a known fact when the statement became effective unless action is taken within 30 days of the effective date.
What may a State Administrator require for some federal covered securities? I Statement of the value of the securities to be sold in the state II Payment of fees III Filing of copies of the federal registration IV Filing of advertising and sales literature A III and IV B I, II, III, and IV C I, II, and III D I and II
C I, II, and III For all but nationally traded securities, the state may require I, II, and III. However, states are prohibited from requiring IV by federal statute, and the prohibition is reflected in the USA.
Under the Uniform Securities Act, which of the following would generally qualify for the private placement exemption? I Securities listed on the New York Stock Exchange II Municipal bonds III Regulation D offerings IV Transactions where offers to 10 or fewer individuals have occurred during any 12-month period A IV B III C III and IV D I and II
C III and IV Transactions defined as private placements under SEC rules are found in Regulation D. Private placements under the USA are transactions where offers to 10 or fewer persons (other than institutional investors) have occurred during the last 12 months. Securities offered in exempt transactions, such as Regulation D private placements and private placements defined under the USA, are not required to register with the states and are both defined as private placements. You may see the number 35 in a question on private placements. This is associated with the qualifications to offer securities under Regulation D.. The number associated with the USA's private placement exemption is 10.
According to the Uniform Securities Act, which of the following is not true regarding the Administrator's powers related to an issuer attempting to register securities with the state? A The Administrator can deny registration because they found that excessive underwriting compensation will be paid B A typo in a registration statement is not grounds for denial C The Administrator needs only 1 reason to deny a registration D If the Administrator finds there is a problem with a registration statement, they have the power to issue a stop order
C The Administrator needs only 1 reason to deny a registration The Administrator might deny a security's registration if they find there is a problem with the issuer or its filing. This denial is sometimes referred to as a stop order. Even if registration is granted, the Administrator could later suspend or revoke the registration if a problem is subsequently discovered. When giving an order to deny, suspend, or revoke registration, the Administrator must give at least 2 reasons, 1 of which must be that the order is in the public interest. In addition, the Administrator must have at least one other reason for the order. These grounds may include 1) the filing contains a statement that is false or misleading, 2) unreasonable amounts of underwriting compensation are being paid, 3) the issuer has failed to pay the proper filing fee, among others.
A distiller places barrels of whiskey into a storage facility where it will age for a number of years before being sold. To finance the cost of storage, the distiller sells legal title to the barrels to an investor. The investor may choose to take physical possession of the barrels, continue to allow the storage facility to hold them, or resell the title to another investor. The evidence of this legal title is called a(n): A Commodity future contract B Distillery direct participation program C Whiskey warehouse receipt D American depository receipt
C Whiskey warehouse receipt Distillers allow whiskey to age in barrels and place the barrels into a warehouse. The warehouse then issues a receipt to the distiller, indicating that the distiller is the beneficial owner of the whiskey and may claim possession at a later date. Instead of waiting, the distiller may choose to sell the receipt to someone else, who hopes to profit from the increasing value of the whiskey as it matures. The value of the receipt will fluctuate, and there is no guaranteed future payment. Therefore, the whiskey warehouse receipt is a security. It is not a commodity futures contract, as that is a legal agreement to buy or sell raw material at an agreed upon price at a future date.
All the following can register a security, except: A A broker-dealer B An issuer C A person who is selling the security D A person who is buying the security
D A person who is buying the security The buyer may not register the security. Any of the other parties may register. Securities are registered by those offering them not buying them.
When a financial product's cash value or return is based upon the performance of a separate account, it would be considered: A Treasury stock B An immediate annuity C Modified life D A security
D A security The USA's definition of 'security' does not include any insurance or endowment policy or contract under which an insurance company promises to pay a fixed sum of money either in a lump sum or periodically for life or for some other specified period. On the other hand, when cash values or returns are based on the performance of a separate account, such as with variable life, variable universal life, and variable annuities, the instrument is considered a security.
According to the Uniform Securities Act, which of the following is the correct definition of a non-exempt security? A Securities issued by the Canadian government and its subdivisions B A security that does not need to meet any advertising requirements C A security that does not need to be registered D A security that must be registered under the Uniform Securities Act
D A security that must be registered under the Uniform Securities Act A non-exempt security is subject to the registration requirements of the USA. The only way to legally issue unregistered, non-exempt securities is through a private placement.
When registration is not required with the state, a security is considered to be: A A blue-sky security B An issuer transaction C A non-exempt security D An exempt security
D An exempt security Exempt securities do not need to be registered with the state and include securities issued by the U.S. government, government agencies, municipalities, non-profit entities, or banks.
When a security is to be federally registered and in multiple states at the same time, the method of registration commonly used is registration by: A Notification B Qualification C Filing D Coordination
D Coordination Registration by coordination is the method commonly used when coordinating federal registration with state registration simultaneously.
State registration is not required by the National Securities Market Improvement Act for which of the following securities? I Securities traded on Nasdaq II Mutual fund shares III Variable annuities IV Private placement to 15 retail persons in the state A I, II, and III B III and IV C II D I, II, III, and IV
D I, II, III, and IV Securities in I, II, and III are federal covered securities (II and III because they must register as an investment company). Since the private placement has over 10 retail investors per 12-month period, it falls under Reg D of the Securities Act of 1933 and is, therefore, a federal covered security according to NSMIA and not required to register in the state.
Which of the following regarding private placements is correct? A A commission is paid to the investor B The transactions take place within a 3-month period C The transactions are to 10 or fewer retail investors D If it meets all the private placement prerequisites, it does not need to be registered
D If it meets all the private placement prerequisites, it does not need to be registered When a transaction meets all the private placement requirements, the security being placed does not need to be registered with the state, nor does it need to meet USA advertising and sales literature filing requirements. Private placements may include an offer (not transaction) to no more than 10 non-institutional investors within any 12-month period. No securities are exempt from the USA's anti-fraud provisions.
Registration by Qualification
is a more complex procedure for registering a new issue. This method can be used to register any security in any state; however, it is usually used only when the issue is not eligible for notice or coordination filing.
Securities listed on the London Stock Exchange are nonexempt (whereas securities listed on the New York Stock Exchange, American Stock Exchange, Midwest (Chicago) Stock Exchange, or Toronto Stock Exchange are exempt), and securities issued by governments which the United States does not maintain diplomatic relations are also ________________.
nonexempt securities
