Ch 2 State Registration of Securities Part II Flashcards
If a Nasdaq stock trades in the secondary market, does the USA consider it an exempt security or exempt transaction?
Exempt security
What criteria must be met for commercial paper to be exempt from registration?
A 270-day maximum life, minimum denomination of $50,000, rated in one of the top-three categories according to an NRSRO
Accepting orders for unregistered, non-exempt securities is allowed if clients attest that the trade was _____________.
unsolicited.
An __________ policy is a type of life insurance that pays face value at the end of a period.
endowment policy
True or False: Securities of a Canadian company, but listed on the NYSE, are exempt from state registration.
True
Is a 401(k) plan considered a security?
No
List the securities that are exempt from registration.
Government/municipal bonds, commercial paper, bankers’ acceptances, bank issues, non-profit and small business issues
Name some of the federal covered securities.
Securities listed on an exchange, issued by an investment company, and sold as a private placement (Reg. D Rule 506)
a universal life insurance policy considered a security?
No
True or False: An issuer whose securities trade on the NYSE must pay a registration fee to a state Administrator.
False
For certain federal covered securities, may an Administrator require the issuer to complete the notice filing?
Yes. Notice filing is the process by which information filed with the SEC is also filed/shared with the Administrator.
True or False: Charitable organizations may issue securities.
True. The securities issued by charitable organizations are exempt from registration.
True or False: A certificate of interest in a mining title is a security under the USA.
True. Certificates of interest in mining or drilling titles are securities under the Uniform Securities Act.
Under the USA, is a federal covered security trading in the secondary market an exempt security or an exempt transaction?
Exempt security
True or False: Exchange-listed futures contracts are securities.
False. Futures and forward contracts are not securities.
As it applies to persons and securities, what does the term “exemption” mean in the USA?
Exemption signifies that a person or security is not subject to registration under the USA.
May a state prevent the sale of a federal covered security in its state?
No. Federal covered securities are not regulated by the state.
Is a multi-level distributorship considered a security?
Yes
True or False: A transaction by an executor is exempt.
True. Any transaction by an executor, administrator, trustee in bankruptcy, or conservator is considered exempt.
Is a fixed annuity a security?
No, but variable contracts (e.g., variable annuities or variable life insurance) are considered securities.
Is a Keogh plan considered a security?
No, but Keogh plan participation is considered a security.
Securities issued by any government with whom the U.S. has _____________ relations are exempt from state registration.
diplomatic relations
Is a preemptive right considered a security?
Yes
True or False: Precious metals are not considered securities.
True
Who must prove that an exemption exists?
The party claiming the exemption
True or False: Occasional, secondary market transactions in an OTCBB stock are considered exempt transactions.
False. Only non-recurring secondary market transactions are considered exempt transactions.
Is an investment interest in livestock considered a security?
Yes
The USA considers preorganization certificates, prime bank notes, and voting trust certificates to be __________.
securities.
NSMIA indicates that securities listed on the NYSE and Nasdaq are _______ _______ securities.
federal covered securities.
Is a whiskey warehouse receipt considered a security?
Yes
According to NSMIA, when is an investment pool considered a federal covered security?
When it registers as an investment company under the Investment Company Act of 1940
Is a certificate of interest in a mining lease a security?
Yes
True or False: The sale of securities to a pension plan is considered an exempt transaction under the USA.
True
Is an isolated, non-recurring, non-issuer transaction in OTCBB or OTC Pink Market stock subject to registration?
No. It is considered an exempt transaction.
Is an option on a commodity futures contract a security?
Yes. Options are securities, but futures contracts alone are not. Options may be tied to an equity, index, or currency.
Is an interest in oil and gas drilling program considered a security?
Yes
Is a limited partnership a security?
Yes
Registration by Coordination requires issuers to meet requirements of the USA as well as what other Act?
The Securities Act of 1933
Are securities issued by a software company exempt from state registration?
No
Is a warrant a security?
Yes. Warrants are financial instruments that allow investors to acquire stock at a preset price.
Is an endowment life insurance policy a security?
No
A car dealer gives 100 shares of stock to all new car buyers. Is this considered a sale of securities?
Yes. Since the gift is contingent on a purchase being made, it is considered a sale of the security.
Registration by Filing (Notification) requires issuers to be in business at least _____ months preceding registration.
36 months
True or False: Options on commodities are securities.
True. Options are always considered securities (e.g., options on futures, a currency, an index, or equities).
Regarding federal covered securities, may an Administrator prohibit the sale of the security in his state?
No
Are bonds issued by a charitable organization subject to state registration?
No. Securities issued by non-profit organizations are exempt from registration.
Non-issuer trading of securities subject to reporting requirements of the Act of 1934 are _________ transactions.
exempt transactions.
Registration by Filing (Notification) requires that the underwriting commission be no more than _____%.
10%
What form of state registration is not available in all states?
Notification (filing)
Is a futures contract considered a security?
No, but an option on a futures contract is a security.
What method of state securities registration requires issuers to wait to hear from the Administrator before selling?
Qualification
What instruments are used to facilitate trading of foreign securities in the U.S.?
American Depositary Receipts (ADRs)
Which Act regulates Unit Investment Trusts?
The Investment company Act of 1940
Transactions between the issuer and its underwriter are considered ________ transactions.
exempt transactions.
True or False: Two friends, anticipating a rise in value, purchase property. The property is considered a security.
False
Is a debenture considered a security?
Yes. A debenture is an unsecured corporate bond.
True or False: Variable annuities are not securities and are, therefore, not subject to registration.
False. Any variable products are considered securities. However, fixed insurance products are not securities.
Is an unsolicited, non-issuer transaction in an OTC stock exempt from state registration?
Yes, because it is unsolicited.
