Unit 8.2 Exempted Securities Under The Securities Act of 1933 (Series 65)

Under the Securities Act of 1933, commercial paper is exempt from the prospectus delivery requirements or registration, unless its maturity is more than how many months? A) 12 months. B) 9 months. C) 3 months. D) 6 months.

Answer: B For exemption under the Securities Act of 1933, commercial paper must mature in 9 months or less. Reference: 8.2 in the License Exam Manual.

Which of the following securities is NOT exempt from the registration provisions of the Securities Act of 1933? A) A U.S. government bond. B) A high-quality corporate promissory note maturing in 180 days. C) An equity security issued in only one state solely to residents of that state. D) A new stock being offered in three states.

Answer: D Government securities, money-market instruments (the promissory note is another way of saying commercial paper), and intrastate offerings are exempt from the registration provisions of the 1933 Act. A stock being offered in three states would have to register with the SEC and possibly with those states. Reference: 8.2 in the License Exam Manual.

Corporate debt securities (such as commercial paper) are exempt from registration under the Securities Act of 1933 if their maturities do not exceed how many days? A) 270 days. B) 30 days. C) 90 days. D) 365 days.

Answer: A Corporate debt securities (such as commercial paper) with maturities of 270 days or less are exempt from registration; longer maturities would subject them to the act's registration and disclosure requirements. Reference: 8.2 in the License Exam Manual.

Under the Securities Act of 1933, the sale of stock of a state bank is exempt from which of the following? I. Prospectus requirements. II. Antifraud provisions. III. Registration requirements. A) I, II and III. B) I and III. C) I only. D) II and III.

Answer: B Both the Uniform Securities Act and the Securities Act of 1933 exempt securities issued by banks, trusts, or savings and loans. While the security is exempt under both acts from registration and prospectus delivery requirements, it is never exempt from the antifraud provisions of the acts. Reference: 8.2 in the License Exam Manual.

Under the Securities Act of 1933, securities issued by a charitable organization are exempt if: A) a minimum of five percent of its assets are distributed each year. B) the organization is nonprofit. C) the organization is operated by funds through government grants. D) no commissions are paid on sales of its securities.

Answer: B The Securities Act of 1933 exempts securities issued by charitable or religious organizations from the registration and prospectus delivery requirements as long as the organizations are nonprofit. Reference: 8.2 in the License Exam Manual.

In 1933, Congress passed the Securities Act which required the registration of new issues before their offering to the public. However, the law contained a number of exemptions including that for: A) obligations of the Canadian government. B) stock issued by regulated insurance company. C) equipment trust certificates issued by a regulated common carrier. D) corporate common stock listed on the NYSE.

Answer: C Although each of these is considered an exempt security under the Uniform Securities Act, only the securities of a regulated common carrier carry an exemption from federal registration. Reference: 8.2 in the License Exam Manual.

An intrastate offering is exempt from: A) blue-sky registration. B) all registrations. C) federal registration. D) state registration.

Answer: C An intrastate offering (Rule 147 exemption) is limited to companies that do business in one state and limit stock or bond sales to that state's residents. Even though this offering may be exempt from SEC registration, it is not exempt from registering with that one state. Blue-sky registration (Uniform Securities Act registration) means the same thing as state registration. Reference: 8.2 in the License Exam Manual.

Under the Securities Act of 1933, which of the following securities is required to register with the SEC? A) 5-year Treasury notes. B) Tupelo Mississippi Bridge revenue bonds. C) Debentures of First Newtown Bank Holding Corporation. D) GNMA pass-through certificates.

Answer: C Bank holding company securities are not exempt from registration requirements under the Securities Act of 1933. Treasury securities, agency securities (such as GNMA-pass-through certificates), and municipal securities (such as revenue bonds) are exempt from registration requirements under the act. Reference: 8.2 in the License Exam Manual.

Under the Securities Act of 1933, securities issued by charitable organizations are exempt if: A) no commissions are paid on the distribution of shares. B) the net earnings from the organization are paid to less than 10 private stockholders. C) the organization is a nonprofit company. D) the organization is funded by government grants.

Answer: C Charitable or religious organizations must be nonprofit in order to gain exemption from full registration. Reference: 8.2 in the License Exam Manual.

Which of the following does NOT have a federally imposed exemption from registration with the SEC? A) Securities issued or guaranteed by a state or political subdivision of a state. B) Promissory notes and bankers' acceptances with maturities of 9 months or less where the proceeds are not used for capital expenditures. C) Shares of bank holding companies traded on the New York Stock Exchange. D) Securities issued or guaranteed by the U.S. government.

Answer: C Under the Securities Act of 1933, shares of bank holding companies listed on the NYSE are not exempt securities and they must be registered with the SEC. However, securities of commercial banks are exempt because they are regulated by the Controller of the Currency or some other banking agency. What might be confusing is that these NYSE listed shares are federal covered securities which makes them exempt from registration with the states. Securities issued or guaranteed by the U.S. government are exempt from registration under federal law. All securities issued or guaranteed by a state or political subdivision of a state qualify for a federal exemption. Promissory notes and bankers' acceptances with maturities of 9 months or less where the proceeds are used for working capital purposes rather than the purchase of fixed assets also have federally imposed exemptions. Reference: 8.2 in the License Exam Manual.

Under the Securities Act of 1933, which of the following are exempt securities? I.Securities issued by the U.S. government, government agencies, and any state or municipality II.Any security issued by a religious, educational, charitable, or not-for-profit institution III.Any security issued by a federal or state bank, savings and loan association, building and loan association, or similar institution IV.Any interest in a railroad equipment trust A) II and IV B) I, II, and III C) I and III D) I, II, III, and IV

Answer: D Most of the securities exempt from registration and prospectus delivery requirements in the Securities Act of 1933 are also exempt under the Uniform Securities Act. Securities exempt under the Securities Act of 1933 include government issues, commercial paper, securities issued or guaranteed by financial institutions, regulated common carrier issues, and nonprofit charitable or religious institutions. There are three securities that are exempt under the Uniform Securities Act and not exempt under the Securities Act of 1933. Stocks and bonds issued by insurance companies, securities issued by foreign governments, and securities listed on certain exchanges are not exempt under the Securities Act of 1933. Reference: 8.2 in the License Exam Manual.

The registration requirements of the Securities Act of 1933 would not apply to which of the following? I.Stocks and bonds issued by insurance companies. II.Fixed annuities and other fixed insurance contracts. III.Securities issued by foreign governments. A) I only. B) II and III. C) III only. D) II only.

Answer: D Securities issued by insurance companies and foreign governments are not exempt under the Securities Act of 1933. However, the registration requirements would not apply to non-security products, such as fixed annuities. Reference: 8.2 in the License Exam Manual.