Ch 2 State Registration of Securities Flashcards
Is a private placement considered an exempt transaction or an exempt security under the USA?
Exempt transaction
What type(s) of transaction(s) are exempt from the antifraud provisions of the USA?
No transaction is exempt from the antifraud provisions of the USA.
Is a preorganization certificate considered a security?
Yes
True or False: Soliciting orders for unregistered, non-exempt securities is prohibited.
True
What does the USA consider a security issued by an investment company that is registered under the Inv. Co. Act of 1940?
The securities are considered federal covered.
In order to qualify for an exemption, who bears the burden of proof?
The person claiming the exemption
True or False: Paperwork related to coordination is filed with the Administrator at the same time as the SEC filing.
False. Registration will become effective simultaneously with SEC registration, but need not be filed at the same time.
Registration by Coordination has a minimum cooling-off period of _____ days.
10 days.
What’s an issuer transaction?
A transaction in which the issuer receives the proceeds.
True or False: According to the USA, debt issued by a fraternal organization would NOT be considered exempt.
False. Securities issued by non-profit organizations are exempt from state registration.
List some of the different types of institutional clients.
IAs, BDs, investment, insurance, or trust companies, banks, savings and loan associations, and pension plans
Is a voting trust certificate a security?
Yes
To use Filing (Notification) to register stock, the offering price must be at least $______ per share.
$5.00 per share.
Are securities that are traded on the Toronto Stock Exchange subject to state registration requirements?
No. These secondary market transactions are considered exempt from registration according to the USA.
How would a well-established corporation register a subsequent offering to be sold in multiple states?
Notification (filing)
Is treasury stock considered a security?
Yes. Treasury stock is stock that was issued and subsequently repurchased by the company.
True or False: Securities that are issued by registered investment companies are considered federal covered securities.
True
True or False: Securities issued by municipalities of Mexico are exempt under the USA.
True. An exemption applies to securities issued by foreign governments with whom the U.S. has diplomatic relations.
True or False: Agents selling unregistered, non-exempt securities to banks and trust companies are violating the USA.
False. Transactions with banks and trust companies are considered exempt transactions.
What is the minimum cooling-off period for registration by notification?
Five days
List some securities that are considered federal covered and exempt from registration.
Those listed on national exchanges (e.g. NYSE, NASDAQ) and investment company securities (e.g., mutual fund shares)
What four elements are required for an investment contract to be considered a security?
1) An investment of money, 2) A common enterprise, 3) Efforts made by a third party, 4) An expectation of profits
True or False: Securities issued by provinces and municipalities of Canada are subject to state registration.
False. Securities issued by Canadian provinces or municipalities are exempt from registration.
Under the USA, is stock issued by an electric company an exempt security or an exempt transaction?
Securities issued by public utilities are considered exempt securities.
State registration remains in effect for ___ year(s).
one year.
Under the USA, private placements are exempt if securities are offered to ____ or fewer retail clients over ____ months.
10 or fewer retail clients over 12 months.
Describe what it means for a security to be registered.
The security may be legally offered or sold in the state.
True or False: Under the Uniform Securities Act, debentures issued by a Canadian bank are exempt from registration.
False
Is a variable life insurance policy a security?
Yes, but a term or universal life insurance policy is not considered a security.
Define an investment contract (according to the Howey Test).
An investment of money, in a common enterprise, with expectation of a profit due to efforts of third-party management.
True or False: Securities issued by the states and municipalities of Mexico are exempt from registration under the USA.
True. An exemption is provided to securities issued by foreign governments with whom the U.S. has diplomatic relations.
An executor of an estate sells a block of securities that are not registered. Is this a violation?
No. This is an example of an exempt transaction.
Though some securities are exempt from registration, nothing is exempt from the ____________ provisions of the Act.
anti-fraud provisions of the Act.
Which method of state securities registration would likely be used for an IPO being offered in several states?
Coordination
If an Administrator was aware of facts before a registration became effective, a stop order may be issued if done within __ days.
30 days.
Regarding federal covered securities, may an Administrator cancel a registration?
No
True or False: An Administrator may not require a sales report from the issuer of an OTC security.
False
True or False: A state may require a registration fee from the issuer of a Nasdaq security.
False. Nasdaq securities are federal covered securities.
Is Keogh plan participation considered a security?
Yes, but the Keogh plan itself is not a security.
Identify the three forms of state securities registration.
Notification (filing), coordination, qualification
True or False: Securities issued by the U.S. Treasury and U.S. agencies are deemed exempt securities under the USA.
True
True or False: A trade of unregistered, non-exempt securities between two BDs is a violation of the USA.
False. This is an exempt transaction.
________ issued by insurance companies are exempt from state registration.
Bonds
True or False: A state Administrator may require notice filing by an issuer of an NYSE security.
False. Notice filing is required for mutual funds and Reg D (Rule 506) offerings, but not exchange listed securities.
The only form of state registration that has its effective date set by the Administrator is _______________.
qualification.
True or False: Securities that are listed on the NYSE are exempt from state registration.
True
Are bonds issued by the City of New York exempt from state registration?
Yes
If an IPO is being registered, an issuer is most likely using what form of state registration?
Coordination
True or False: Under the Uniform Securities Act, municipal bonds are federal covered securities.
False. Municipal bonds are exempt securities. Federal covered securities include listed stocks and mutual funds shares.
Are securities that are traded on the OTCBB or the OTC Pink Market exempt?
No
Is an interest in a real estate condominium development considered a security?
Yes
Give some examples of insurance company offerings that are exempt from the antifraud provisions of the USA.
Life insurance policies and fixed annuities are exempt from the provisions since they are not securities.
Is an IRA account considered a security?
No
True or False: Federal covered securities issuers may be required to pay a filing fee to an Administrator.
True. Certain types of federal covered securities issuers may be required to pay a filing fee.
True or False: An American Depositary Receipt (ADR) is a security.
True
The solicitation of buyers for unregistered, non-exempt securities is _____________.
prohibited.
True or False: Bonds issued by a railroad are exempt from state registration.
True. Securities issued by a railroad, common carrier, or public utility are exempt at the state level.
True or False: IRAs and Keogh plans are considered securities.
False. The participation in these plans (what goes in the plan) is considered a security, but the plan itself is NOT.
True or False: Bankers’ Acceptances rated AAA, maturing in 6-months, and issued in $25,000 denominations are exempt.
False. Because the BAs were not issued in at least $50,000 denominations, registration is required.
An intrastate offering may use which method of state securities registration?
Qualification
