Chapter 2 series 63
Not securities under the act
An insurance or edowment policy, annuity contact fixed products, life insurance, interest in retirement plan such as ira and keogh plan, collectibles, commodities, such as precious medtals and grains or futures contracts of commodities, personal restidents, condominiums and currancy
Issuer transaction is one in which the proceed of the sale
An issuer involving new securitys is called primary offering If its is the first time an issuer distributes securities to the public is called initial public offering ipo
For purposes of transactional exemptions, which of the following qualify under the Uniform Securities Act? Executor of an estate Administrator of a trust
Both executors and administrators are fiduciaries. An agent might be considered to be acting as a fiduciary if the agent has discretionary authority over the assets in the account, but time and price authority is not considered discretion. However, in any event, the agent is not included in the list of those fiduciaries qualifying for the transactional exemption. While the custodian does have fiduciary responsibility to the minor, for purposes of the USA's exempt transaction rules, the custodian is not included in the category along with executors, trustees, and sheriffs, etc.
Which of the following is NOT an exempt transaction as defined in Section 402 of the USA?—
First of all, don't panic when you see a Section number - just answer the question based on the specific topic; in this case, the definition of an exempt transaction. An isolated sale of a corporate bond on behalf of the bond's issuer is not exempt. Under the USA, only isolated nonissuer transactions are exempt. In this question, the transaction is on behalf of the issuer, so this transaction is not exempt. The sale of a corporate bond to an insurance company is the sale of a security to a financial institution; this is an exempt transaction. A sale of common stock by the executor of an estate, or by the county sheriff is considered a fiduciary transaction and is exempt regardless of the client or the type of security.
Nonissuer transaction— is one in which the proceeds of the sale do not go either directly or indirectly to the entity's that originally offered the securities to the public.
Examples of everyday trading in thr secondary market such as the new york stock echanges or NASDAQ
Investment company securities registration under investment company act of 1940
Open ended management investment companys mutiual funds Closed end management investment companies Unit investment trust Face amount certificates
Which of the following exemptions describes the sale of securities to institutions that are regarded as professional investors?
Exempt transaction The Uniform Securities Act is designed to protect the general public, not to limit the activities of informed professional investors, such as banks, insurance companies, and pension or profit-sharing trusts. Transactions with institutions are exempt. Blue-chip and manual exemption applies to securities, not transactions.
If a broker-dealer purchases 100,000 shares of common stock from an individual investor, this is a—
In a nonissuer transaction, the proceeds of the trade do not benefit or go to the issuer.
Under the USA, all of the following are exempt transactions EXCEPT —a sale of a primary offering registered with the SEC
In almost every instance, an issuer transaction-that is, one for the benefit of the issuer-will not be considered an exempt transaction. Exempt transactions include isolated nonissuer transaction; transactions between an issuer and an underwriter; transactions by an executor, administrator, sheriff, marshal, trustee in bankruptcy, guardian, or conservator; any sale or offer to a bank, savings institution, investment company, or other financial institution; and private placements.
All of the following are exempt securities under the Uniform Securities Act EXCEPT—
Securities issued by a bank are exempt. However, this answer refers to a bank holding company that is considered to be an ordinary company subject to state registration if not otherwise exempt.
Under the USA, all of the following statements regarding private placements are true
offers can be made to no more than 10 noninstitutional clients during any 12-month period offers can be made to an unlimited number of institutional buyers commissions cannot be paid for soliciting noninstitutional buyers
Which of the following are federal covered securities? A security quoted on the Nasdaq Stock Market Shares of an investment company registered under the Investment Company Act of 1940 A security offered under the exemption provided by Regulation D of the Securities Act of 1933 A security that has a federally imposed exemption from state securities registration
Any Nasdaq security, shares of a registered investment company, a security offered under the private placement exempt of Regulation D of the Securities Act of 1933, a security that has a federally imposed exemption from state securities registration, and a security traded on a regulated exchange are all federal covered securities.
Under the Uniform Securities Act, which of the following are exempt from the requirements to file advertising and sales literature with the Administrator?—
If a transaction is exempt, it is exempt from the requirement to file advertising and sales literature with the Administrator. All unsolicited transactions fit into the category of exempt transactions. Exempt securities, whether traded in a solicited or unsolicited transaction, are always exempt from the filing requirements.
According to the Uniform Securities Act, which of the following would be considered exempt transactions? The sale of a unlisted corporate bond by an executor of an estate An unsolicited order from an individual client to purchase a nonexempt, unregistered security
Fiduciary transactions and unsolicited orders, regardless of the security being purchased or sold, are always exempt transactions under the USA. Preorganization certificates are limited to a maximum of 10 subscribers, whether individuals or institutions. A gift of securities is not a sale, so no transaction has taken place.
A stock that is listed on the New York Stock Exchange is—
Securities listed on the New York Stock Exchange (NYSE), NYSE American LLC (formerly known as the American Stock Exchange), or Nasdaq Stock Market are federal covered securities and do not need registration in any state under the Uniform Securities Act.
Under the notice filing procedures Documents filed along with their registration statement filed with the sec Documents filed as amendment to the initial federal registration statement
A report on the value of such offered in the state Consent to service of process
Exempt transaction— means not subjected to regist
Issuer— is any person who issues (distributes or proposed to issue a security. The most common issuer of securities are compaines or gov. Fed,state, and municpal gov, and their agancy and subdivision.
Securities exempt under the Uniform Securities Act are exempt from—
An exempt security is exempt from the registration requirements and the provisions that require the filing of advertising and sales literature. Exempt securities are never exempt from the antifraud provisions of the act.
Among the many exempt transactions under the Uniform Securities Act are the private placement and the preorganization certificate or subscription. While these two exemptions have several requirements in common, they have which of the following differences? -Payment for the purchase may be made in the case of a private placement, while no money changes hands in a preorganization subscription. -It is expected that noninstitutional buyers of the private placement are purchasing for investment only, while no such requirement exists for the investors in a preorganization certificate.
No money changes hands in the sale of a preorganization certificate or subscription, while the seller receives payment in the case of a private placement. The state will consider a private placement an exempt transaction if it is anticipated that individual (noninstitutional) investors are purchasing for investment only, not immediate resale. No holding period restrictions are placed on preorganization certificates. Only in the case of a sale of a private placement to an institutional client is it permissible to pay commissions. Finally, choice I has it backwards. When referring to retail (noninstitutional) investors, there is a limit to the number of offers (10), while in the preorganization certificate, the number of sales (subscribers) is limited to 10 regardless of whether they are retail or institutional.
Under the National Securities Markets Improvement Act of 1996, which of the following statements describe federal covered securities? A security registered under the Investment Company Act of 1940 A security of a company regulated by the U.S. Federal Reserve Board A security issued by the U.S. government
A federal covered security has a federally imposed exemption from state registration so selecting a choice that includes registering under the USA cannot be correct. The list includes most securities exempt from registration under the federal Securities Act of 1933 (those issued by the U.S. government and state and local governments as well as bank securities regulated by the Federal Reserve Board). In addition, it includes a number of securities registered with the SEC, primarily those traded on the exchanges and Nasdaq as well as investment companies registered under the Investment Company Act of 1940.
ABC Securities is a two-office broker-dealer in Idaho that intends to underwrite an initial public offering of 1 million shares of stock for Circular, Inc. If the issue will be offered exclusively to residents of Idaho, registration of this offering—
An issue done solely within one state (intrastate offering) is registered using qualification. Notice filing is used by certain issues of federal covered securities, primarily investment companies. Coordination is the simultaneous registration on both the federal and state level; neither of those two could possibly apply to the Circular offering.
Continue on securities
Any interst or instruments commenly known as a security, certificate of interst or partcipation in receipt of guarantees of or warrants of right to subscribe to or parchase any of the above
An issuer of federal covered securities, whose registration is effective under the Securities Act of 1933, would use which of the following procedures to permit sale of its securities in a specific state?—
Notice filing is the procedure by which federal covered securities, most commonly registered investment company securities, receive clearance for their securities to be sold in a specific state. No formal registration is required, but payment of fees and filing of certain documents may be.
Federal covered securities
Nyse, chicago stock exchange the NASAQ, several other US exchange, rights warrents, bonds, prefered stocks
Offer and sale of certain exempt securities Any securities issued or guaranteed by the U.S or banks regulated by FRB Securities offered by municipal issuers unless the issuer is located in the state in which municipal securities are being offered
Offer and sale of securities sold through certian exempt transaction such as securites offeed to qualifed purchases under the regulation d of the securities of 1933 private placement.
Which of the following is (are) exempt from the registration requirements of the Uniform Securities Act? Securities issued by a nonprofit organization Securities guaranteed or issued by a federal savings and loan T-bills Unit investment trusts registered with the SEC
Securities issued by nonprofit organizations, federal savings and loans, and the U.S. government (i.e., Treasury bills, Treasury bonds) are exempt from the registration requirements of the Uniform Securities Act. Unit investment trusts that are registered under the Investment Company Act of 1940, are federal covered securities and, therefore, are exempt.
A primary issue is
A primary issue is a new offering of securities by an issuer sold to investors. Transactions between two investors in the over-the-counter market refer to secondary transactions (the market between investors). A sale between investors of securities traded on the New York Stock Exchange is another example of a secondary transaction.
A security has been registered under Qualification. Which of the following statements is CORRECT?—
A registration under Qualification is good for one year from the effective date, unless the issuer or underwriter still has unsold shares. In that case, it may be extended until those shares are sold. The offering could be enlarged as long as the share price is not changed. Another requirement, not in this question, is that the underwriting commissions could not be changed. So, why isn't choice I part of the correct answer? Because on the exam, when you are given two answers that are correct statements, you must choose the one that is the "most" correct; the one that more completely tells the story.
Which of the following securities is (are) NOT subject to state registration under the Uniform Securities Act?
Equipment trust certificates issued by a railroad subject to federal regulation Preferred stock of a bank holding company listed on the New York Stock Exchange Subordinated convertible debentures issued by the Dominion Electric Company of Canada, a public utility regulated by the Canadian federal government Shares of a savings and loan institution authorized to do business in the state
Registration of securities under the act.
Is is unlawful for any person of offer or sell secuities in the state unless, resistered under act, securities or transaction is exempted from registration undr the act, it is federal covered securities.
Which of the following are exempt from state registration? An isolated nonissuer transaction A transaction by an administrator of an estate
Isolated nonissuer transactions and transactions by an administrator of an estate are included in the list of exempt transactions. With the exception of Canada, no foreign securities, other than those issued or guaranteed by the sovereign government, are exempt securities. Perhaps you read too quickly and thought it was San Jose, California (which would be exempt).There is a limited offering exemption, but it is limited to no more than 10 retail (non-institutional) investors in a 12 month period.
In order for a security to lawfully be sold or offered under the USA, it must meet at least one of the following requirements EXCEPT that it is—
It is unlawful to sell a security in a state unless the security is a federal covered security, exempt from registration under the USA, sold in an exempt transaction, or registered under the act. There is no requirement that a security be registered with the SEC; that is the primary purpose of registration by qualification - registering a security on the state level that is not SEC registered.
An open-end investment company registered under the Investment Company Act of 1940 would most likely use the process known as—
Mutual funds are federal covered securities and, if required by the state Administrator, are only required to engage in notice filing.
Which of the following is NOT a security?— Term life insurance policy
Nonvariable life insurance policies are not securities, whereas variable ones are securities.
Under the uniform securities act Definition if a security
Notes, stocks, treasury stock, bond, debentures, evidence of indebtedness, certificate ofmintrrest or participation in a profit sharing agreement Collateral trust certificate or subscription, preorganization certifcate or subcription, transferable shares, investment contract, voting trust certificate, Certificate of deposit forma security adr not bank cd. Certificate of interest or particapation im an oil,gas or mining titles or lease or im payments out if production inder such title or lease, put calls straddles, option, or privileges on a security
Method of state registration of securities
Notice filing, coordination and qualifications
Certain securities transactions are considered exempt from the registration and advertising filing requirements of the Uniform Securities Act. Included in that group would be all of the following EXCEPT—
Private placements are exempt under the USA if they are offered to no more than 10 retail investors in any consecutive 12-month period, not calendar year. Transactions involving issuers and underwriters are also exempt. The sale of preorganization certificates is exempt if there is no commission for solicitation or payment by subscribers and no more than 10 subscribers; there is no limit to the number of offers that may be made. Institutional investors (and pension plans with at least $1 million in assets meet that definition) are not included in the numerical limitations.
When an issue is registered by coordination, it is also registered under the provisions of the Securities act 1933
Registration by coordination coordinates state registration of a security with federal registration of that security. Securities are registered at the federal level under the Securities Act of 1933.
a nonexempt issuer wants to register simultaneously with the state and the SEC, which method would be used? Registration by coordination
Registration by coordination is done concurrently with registration at the federal level. Registration by qualification is the method for local companies sold only within the state.
Exempt securities
U.S and Canadian gov. And municipal securities Foreign gov. Securities Depository institution Insurance company Public utility Federal covered Securities issued by nonprofit organization Securities issued by cooperative Securities of employee benefits plan Certain money market instruments
All of the following statements regarding the selling of private placements under the USA are true EXCEPT that—
Under state law, a private placement can be offered to no more than 10 noninstitutional investors in 12 consecutive months.
Keely Company, Inc., has outstanding equity securities registered with the SEC. The company issues a debt security directly to financial institutions. This sale is an example of a(n). (exempt transaction)
Under the Uniform Securities Act, the sale of securities to financial institutions is an exempt transaction.
Under the Uniform Securities Act, a non-exempt transaction may take place in the state only if—
We are told that the transaction is not exempt. Therefore, unless the security is exempt (or federal covered), the only way to have a legal sale is for it to be registered.
A primary issue is
a new offering of an issuer sold to investors
